Comrev2 Case Digests 1

COMMERCIAL LAW REVIEW II
(CASE DIGESTS)
Submitted to:
Dean Sergio M. Ceniza
Submitted by:
UE ComRev2 (IV-A-2)
TABLE OF CONTENTS
CASES ON BANKING LAWS
General Banking Act of 2000/ New Central Bank Act PAGE

1. East West Banking Corp. v. Cruz, G.R. No. 221641, July 12, 2021 6
2. Allied Banking Corp. v. Spouses Macam, G.R. No. 200635, February 1, 2021 8
3. Land Bank of the Philippines vs. Catadman, G.R. No. 200407, June 17, 2020 9
4. Go vs. BSP G.R. No. 178429, Oct. 23, 2009 12
5. Soriano vs. People, G.R. No. 162336, Feb. 1, 2010 15
6. Apolinario, Jr. y Llauder vs. People, G.R. No. 242977, October 13, 2021 18
7. Central Bank of the Phils. vs. C.A, G.R. No. 7618, March 30, 1993, 220 SCRA 536 22
8. BF Savings Bank vs . MB, G.R. Nos. 70054 and 68878, Dec 11, 1991, 204 SCRA 25
767
9. Central Bank of the Phils. v. CA, G.R. No. 88353, May 8, 1992, 208 SCRA 652, 26
684-685
10. RB of San Miguel, Inc. vs. MB, BSP, G.R. No. 150886, Feb. 16, 2007, 516 SCRA 29
154, 160
11. Bangko Sentral ng Pilipinas v. Office of the Ombudsman, G.R. No. 201069, June 30
16, 2021
12. Citystate Savings Bank vs. Teresita Tobias, et. al., G.R. No. 227990, March 07, 32
2018
13. Goldwell Properties Tagaytay, Inc. v. Metrobank, G.R. No. 209837, May 12, 2021 34
14. BSP and Chuchi Fonacier vs. Hon. Nina Valenzuela, et. al., G.R. No. 184778, Oct. 40
2, 2009
15. Banco Filipino Savings and Mortgage Bank vs. BSP, G.R. No. 200642, April 26, 43
2021
16. Hermosa Savings and Loan Bank, Inc. vs. DBP, G.R. No. 222972, February 10, 44
2021
17. Soriano v. People, G.R. No. 240458, January 8, 2020 46
18. Sps. Carbonell vs. Metropolitan Bank and Trust Co., G.R. No. 178467, April 26, 51
2017
19. BPI vs. Spouses Quiaoit, G.R. No. 199562, January 16, 2019 54
20. Union Bank of the Philippines vs. Sy Lian Teng, G.R. No. 236419, March 17, 2021 58
Bank Secrecy Law/Foreign Currency Deposits Act

1. GSIS vs. Court of Appeals, et. al, G.R. No. 189206, June 8, 2011 62
2. China Banking Corp. v. Court of Appeals, G.R. No. 140687, 18 Dec. 2006 66
3. Intengan v. Court of Appeals, 377 SCRA 63 (2002) 67
2
4. China Banking Corp. v. Ortega 49 SCRA 355 (1973) 69
5. Marquez vs. Desierto 359 SCRA 772 (2001) 72
6. Karen E. Salvacion, et. al vs. Central Bank, et. al, G.R. No. 94723. Aug. 21, 1997 74
7. Ricardo B. Bangayan vs. RCBC, et. al. G.R. No. 149193, April 4, 2011 76
8. BSB Group, Inc. vs. Sally Go a.k.a. Sally Go-Bangayan, G.R. No. 168644, Feb. 16, 79
2010
9. Joseph Victor Ejercito vs. Sandiganbayan , G.R. Nos. 157294-95, November 30, 80
2006
10. The Real Bank (A Thrift Bank), Inc. v. Maningas, G.R. No. 211837, March 16, 82
2022)
AMLA
1. Republic vs. Hon. Antonio Eugenio, G.R. No. 174629, February 14, 2008 84
2. Republic vs. Glasgow Credit and Collection Services, Inc., G.R. No. 170281, Jan. 87
18, 2008
3. Republic vs. Cabrini Green Ross, Inc., G.R. No. 154522 June 19, 2009 89
4. Subido Pagente Certeza, et. al. vs. Court of Appeals, G.R. No. 216914, December 90
6, 2016
5. Ret. Lt. Gen. Jacinto C. Ligot, et. al. vs. Republic, G.R. No. 176944, March 6, 2013 92
6. Republic of the Phils., et. al. vs. First Pacific Network Inc. G.R. No. 156646 Nov. 97
19, 2014
7. Republic vs. Bloomberry Resorts and Hotels, Inc., G.R. No. 224112, September 2, 98
2020
8. Republic vs. Ongpin, G.R. No. 207078, June 20, 2022 102
9. Yambao vs. Republic, G.R. No. 171054, January 26, 2021 105
10. Republic vs. Ng, G.R. No. 239047, June 16, 2021 108
11. Lingad vs. People, G.R. No. 224945, October 11, 2022 112
12. Republic vs. Sandiganbayan, G.R. Nos. 232724-27, February 15, 2021 117
13. Republic vs. Eugenio, Jr., G.R. No. 214071, February 15, 2022 119
14. Republic vs. Ng, G.R. No. 239047, June 16, 2021 125
15. Beacon Currency Exchange, Inc. vs. Republic, G.R. No. 255099, March 18, 2021 127
CASES ON INTELLECTUAL PROPERTY LAW
Patent
1. Smith Kline Beckham Corp. vs. CA, GR No. 126627, Aug. 14, 2003 129
2. Creser Precision System Inc. vs. CA (GR No. 118708, Feb. 2, 1998) 130
3. E.I. Dupont De Nemours and Co. et. al. vs. Dir. Emma Francisco et. al., G.R. 132
No. 174379, Aug. 31, 2016
136
3
4. Phillips Seafood Phils. Corp. vs. Tuna Processors, Inc., G.R. No. 214148, Feb.
6, 2023
Trademark
5. W Land Holding, Inc. vs. Starwood Hotels and Resorts Worldwide, Inc., G.R. 142
No. 222366, December 4, 2017
6. UFC Phils., Inc., et. al. vs. Fiesta Barrio Mfg. Corp., G.R. No. 198889, Jan. 20, 144
2016
7. Citigroup, Inc. vs. Citystate Savings Bank, Inc., G.R. No. 205409, June 13, 146
2018
8. Zuneca Pharmaceutical vs. Natrapharm, Inc., G.R. No. 211850, September 8, 150
2020
9. Kolin Electronics Co., Inc. vs. Kolin Phils. Int’l, Inc., G.R. No. 228165, 156
February 9, 2021
10. Suyen Corp. vs. Danjaq LLC, G.R. No. 250800, July 6, 2021 158
11. Medina vs. Global Quest Ventures, Inc., G.R. No. 213815, February 8, 2021 160
12. Emzee Foods, Inc. vs. Elarfoods, Inc., G.R. No. 220558, February 17, 2021 164
Trademark Infringement and Unfair Competition

13. Victorio Diaz vs. People of the Phils. and Levi Strauss [Phils.], Inc., G.R. No. 169
180677, Feb. 18, 2013
14. Asia Pacific Res. Int’l Holdings, Ltd. vs. Paperone, Inc., G.R. Nos. 213365-66, 172
Dec. 10, 2018
15. Prosel Pharmaceuticals & Distributors, Inc. vs. Tynor Drug House, Inc., G.R. 174
No. 248021, September 30, 2020
16. San Miguel Pure Foods Co., Inc. vs. Foodsphere, Inc., G.R. Nos. 217781 & 176
217788, June 20, 2018
17. Kho vs. Summerville Gen. Merchandising & Co., Inc., G.R. No. 213400, 178
August 4, 2021
18. Petron Corp. v. Yao, Sr., G.R. No. 243328, March 18, 2021 180
19. Kolin Electronics Co., Inc. v. Kolin Phils. Int’l, Inc., G.R. No. 228165, 185
February 9, 2021
20. Ginebra San Miguel, Inc. vs. Director of the Bureau of Trademarks, G.R. Nos. 190
196372, 210224, 216104 & 219632, August 9, 2022
Copyright
21. Habana vs. Robles (GR No. 131522, July 19, 1999) 194
22. Filipino Society of Composers, Authors and Publishers, Inc. vs. Anrey, Inc., 196
G.R. No. 233918, August 9, 2022
23. ABS-CBN Corp. vs. Felipe Gozon, et. al., G.R. No. 195956, March 11, 2015 198
4
24. Republic vs. Heirs of Tupaz IV, G.R. No. 197335, September 7, 2020 202
Copyright Infringement
25. Pearl & Dean vs. Shoemart, Inc. et al. (GR No. 148222) (Aug. 15, 2003) 206
26. Columbia Pictures vs. Court of Appeals 261 SCRA 144 (1996) 210
27. NBI- Microsoft Corp. vs. Hwang, G.R. NO. 147043, June 21, 2005 213
28. Microsoft Corporation vs. Rolando D. Manansala, G.R. No. 166391, October 218
21, 2015
29. Filipino Society of Composers, Authors and Publishers, Inc. vs. Anrey, Inc., 219
G.R. No. 233918, August 9, 2022
30. Cosac, Inc. vs. Filipino Society of Composers, Authors and Publishers, Inc., 221
G.R. No. 222537, February 28, 2023
31. Icebergs Food Concepts, Inc. vs. Filipino Society of Composers, Authors, and 226
Publishers, Inc., G.R. No. 256091, April 12, 2023
32. Philippine Home Cable Holdings, Inc. vs. Filipino Society of Composers, 229
Authors & Publishers, Inc., G.R. No. 188933, February 21, 2023
Copyright vs. Trade or Service Name

33. Juan v. Juan, G.R. No. 221732, August 23, 2017 232
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1. EAST WEST BANKING CORP. V. CRUZ
G.R. No. 221641, July 12, 2021
Ponente: HERNANDO, J.
Student Assigned: ALARIAO
Topic under the Syllabus: General Banking Act of 2000/ New Central Bank Act
DOCTRINE: "The business of banking is one imbued with public interest As such, banking institutions
are obliged to exercise the highest degree of diligence as well as high standards of integrity and performance
in all its transactions. The law expressly imposes upon the banks a fiduciary duty towards its clients and to
treat in this regard the accounts of its depositors with meticulous care."
FACTS: East West Banking Corporation filed a Complaint before the RTC for Sum of Money with
Application for Issuance of a Writ of Preliminary Attachment against respondents Ian Y. Cruz (Ian)
and Paul Andrew Chua Hua (Paul), seeking to recover the total amount of P16,054,541.66. In the same
Complaint, the Bank impleaded herein respondents Francisco T. Cruz (Francisco), Ian's father, and
Alvin Y. Cruz (Alvin), Ian's brother, as unwilling co-plaintiffs.
The Bank alleged that Paul debited P16,054,541.66 from the accounts of Francisco and Alvin and then
credited the same amount to Ian's account by representing that Francisco and Alvin undertook to
"regularize" the transactions later on. Using the debited amounts, Ian successfully obtained a "back-to-
back" loan from the Bank. Ian then purportedly used the same amount to pay for the said loan.
However, instead of "regularizing" the transactions, Francisco and Alvin demanded the payment of
P16,054,541.66 from the Bank as evidenced by Foreign Exchange Forward Contracts (FEFCs). The
Bank, however, rejected Francisco and Alvin's demand stating that the FEFCs are spurious. The Bank
asserted that the issuance of spurious FEFCs was part of the scheme of Ian and Paul to defraud
Francisco, Alvin, and the Bank.
A hearing on the prayer for the issuance of a writ of preliminary attachment was conducted by the trial
court. Renato affirmed that Ian paid the loans and confirmed that the Bank did not pay Francisco and
Alvin after they demanded payment upon presentation of the FEFCs, which was supposedly a legitimate
transaction.
The RTC granted the Bank's application for the issuance of a writ of preliminary attachment against
Paul and Ian and declared that the Bank had "a sufficient cause of action against the defendants [Ian and
Paul.]
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Ian filed a Motion to Dismiss on the ground that the Complaint failed to state a cause of action. He
explained that the Bank did not allege any right which belonged to it, given that it rejected Alvin and
Francisco's demand, thereby causing no damage on its part. He asserted that since the deposit accounts
belonged to Alvin and Francisco, the right to these deposits belonged to them and not the Bank. The
Bank had no legal personality to institute the case since Francisco and Alvin, as owners of the debited
accounts, were the real parties-in-interest.
RTC: RTC ruled that the Bank did not sufficiently allege its right, thus it dismissed its complaint for
failure to state a cause of action. The trial court ruled that Francisco and Alvin were the real parties-in-
interest, not the Bank, who would stand to be benefitted or injured by the judgment in the suit.
The Bank elevated the case to the CA by filing a Notice of Appeal under Rule 41 of the Rules of Court.
CA: It held that the RTC's November 25, 2013 Order which dismissed the Complaint on the grounds
of failure to state a cause of action and lack of legal personality involved pure questions of law. Hence,
the Bank should have filed a petition for review on certiorari to the Supreme Court under Rule 45 and
not an appeal under Rule 41.
ISSUE: Whether the Bank has right to the deposit accounts allegedly withdrawn unauthorized. (NO.)
RULING: With respect to the alleged unauthorized withdrawals, the Bank cannot validly claim to have
any right to such deposit accounts as it belongs to their owners, Francisco and Alvin. The Complaint
fails to allege that it was Ian who made the unauthorized withdrawals, but what was mentioned in the
Complaint is that the purported unauthorized withdrawals were made only by Paul.
In relation to this, in deposits of money, a bank is considered as the debtor while the depositor is the
creditor. Since their contract is governed by the provisions of the Civil Code on simple loan or mutuum,
the deposit must be paid upon demand by the depositor. Thus, the Bank in this case would not stand
to be injured as it is merely maintaining or keeping the money in trust for the depositors.
It is known that "the business of banking is one imbued with public interest As such, banking
institutions are obliged to exercise the highest degree of diligence as well as high standards of integrity
and performance in all its transactions. The law expressly imposes upon the banks a fiduciary duty
towards its clients and to treat in this regard the accounts of its depositors with meticulous care."
If the Bank deemed that it received damage in any way, it has no one to blame but itself, or rather, its
employees who allowed the transfer of funds without proper verification, including the issuance of the
7
alleged spurious FEFCs. Paul could not have successfully completed the transactions without the
approval of his superiors.
2. ALLIED BANKING CORPORATION vs. SPOUSES MARIO ANTONIO MACAM &

ROSE TRINIDAD MACAM
G.R. No. 200635, February 01, 2021
Student Assigned: ALCAZAREN
DOCTRINE: Allied Bank, as a Bank, is required to exercise Extraordinary Diligence in handling and
care of its deposits. The Bank has a fiduciary duty to treat the accounts of its depositors with meticulous care.
The Bank’s liability for damages arises from its negligence in the performance of its obligation to its
depositors.
FACTS: Mario Macam invested in the cellular card business owned by Helen Garcia as per
recommendation of his brother and facilitated by Elena Valerio who was unit Manager in Helen's
business. Mario deposited P1,572,000.00 in Valerio's Savings Account with Allied Bank-Pasay Road
Branch.
On February 6, 2003, respondent Cana informed the bank teller to anticipate a deposit by Helen in the
amount of 46m and instructed the Branch Operating Officer to arrange for two armored vans to pick
up the 46m deposit. Thereafter, Cana gave the bank teller 5 filled out and approved fund transfer
receipts in the total of 46m. Berras protested to Cana that she cannot credit the corresponding amounts
to the five accounts as indicated in the fund transfer receipts. Nonetheless, Cana effected a local override
and approved the fund transfer even at that time Helen bank account balance did not amount to P46
Million.
Valerio withdrew P1722,500 from her deposit account and deposited 1,590,00 to the account of Sheila
mario’s wife. Sheila deposited the said amount and opened a savings account at allied bank pasong
tamo.Subsequently Branch operation officer received a text message from can a that the 46m deposit
had been canceled. Due to significant discrepancy allied bank investigated the branch and its transaction
and ordered the debit of the remaining 1.1m from the account to sposes macam which resulted in the
8
closure thereof.Spouses macam learned about the closure and later then filed a complaint for damages
against the bank.
ISSUE: Whether allied bank is liable for the ultra vires acts of its employee. (YES.)
RULING: The Supreme Court held that the act of Cana even though unauthorized still binds the bank.
Under the doctrine of apparent authority, the authority of a corporate officer or agent in dealing
with third persons may be actual or apparent. The apparent authority to act for and to bind a
corporation may be presumed from acts of recognition in other instances, wherein the power was
exercised without any objection from its board or shareholders. In this case, Caña's act of approving the
P46 Million fund transfer and the subsequent transfers to different accounts in various branches of
Allied Bank leading to the P1,590,000.00 transfer to the account of the Spouses Mario Macam all appear
to have been clothed with authority. Indeed, the subsequent transfers (of funds) were approved by
several Branch Heads.
The doctrine of apparent authority is derived not merely from practice. Its existence may be ascertained
through 1) the general manner in which the corporation holds out an officer or agent as having the
power to act, or in other words, the apparent authority to act in general, with which it clothes him; or
2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof,
within or beyond the scope of his ordinary powers.
Prescinding from all the foregoing, the lower courts were correct in sustaining Allied Bank's liability to
the Spouses Mario Macam for culpa contractual.
3. LANDBANK OF THE PHILIPPINES VS. GUALBERTO CATADMAN

G.R. No. 200407, June 17, 2020.
Ponente: GAERLAN, J.
Student Assigned: ALUMNO
Topic under the Syllabus: General Banking Act of 2000/New Central Bank Act
9
DOCTRINE: The law imposes on banks high standards in view of the fiduciary nature of banking.
Section 2 of Republic Act (RA) No. 8791, declares that the State recognizes the “fiduciary nature of
banking that requires high standards of integrity and performance.”
The bank is under obligation to treat the accounts of all its depositors with meticulous care, always having
in mind the fiduciary nature of their relationship. —The bank is under obligation to treat the accounts of
all its depositors with meticulous care, always having in mind the fiduciary nature of their relationship.
This fiduciary relationship means that the bank’s obligation to observe “high standards of integrity and
performance” is deemed written into every deposit agreement between a bank and its depositor. The
fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good
father of a family. Likewise, Section 2 of R.A. No. 8791 prescribes the statutory diligence required from
banks — that banks must observe “high standards of integrity and performance” in servicing their
depositors.
FACTS: On March 21, 1999, Land Bank of the Philippines (Land Bank) received the following
Development Bank of the Philippines (DBP) Checks: (1) No. 1731263 in the amount of P8,500.00
payable to GCNK Merchandising, owned by respondent Gualberto Catadman (Catadman), to be
credited to his Land Bank Account No. 2562-0016-49; (2) No. 151837 in the amount of ₱100,000.00
payable to National Economic Development Authority (NEDA) - Regional Office XI and to be
credited to its Land Bank Account No. 2562-001-46; and (3) No. 358896 in the amount of ₱6,502.68
payable to Benjamin S. Reyno (Reyno) and to be credited to his Land Bank Account No. 2561-0135-
70. These three checks were all drawn by DBP Mati Branch and endorsed to Bajada Branch of Land
Bank thru its Davao Branch.
On May 26, 1999, all three checks were cleared. Two days later, however, NEDA's DBP Check No.
151837 and Reyno's DBP Check No. 358896 were erroneously credited to Catadman's account, while
his DBP Check No. 1731263 was inadvertently credited twice to his account. Hence, the total amount
of P115,062.68 was credited to his account.
On June 25, 2001, Land Bank discovered the erroneous transactions, which prompted it to send a
formal demand letter to Catadman for the return of the amount of ₱115,002.68 which represents the
total amount credited to his account less the ₱8,500.00 which rightfully belonged to him. Catadman,
however, did not heed Land Bank's letter.
On October 8, 2001, Land Bank sent another demand letter to Catadman. Thereafter, there was an
exchange of correspondence between them. Finally, in his February 11, 2002 letter, Catadman
10
acknowledged that the amount was credited to his account and that he had already spent it. As a way of
settlement, he promised to pay the amount of ₱2,000.00 monthly until the whole amount is returned.
Catadman did as he promised. However, after paying an accumulated amount of ₱15,000.00, he

stopped and refused to make further payments. The matter was referred to the legal counsel of Land
Bank. Consequently, the bank sent its letter dated January 21, 2003 to Catadman demanding payment
of the entire balance. Catadman failed to respond to the letter. Land Bank was thus constrained to file a
case for collection of sum of money before the Municipal Trial Court in Cities (MTCC) of Davao City.
MTTC: The MTCC ruled that the obligation of Catadman to reimburse Land Bank the amount
erroneously credited to his account was a natural obligation and not a civil obligation. Accordingly, the
bank had no right of action to enforce such reimbursement against Catadman. It further ruled that the
full reimbursement of the amount sought to be recovered by Land Bank depends upon the conscience
of Catadman. It explained that if Catadman would not hearken to his conscience that he had availed of
the money which did not rightfully and lawfully belong to him and would not continue to pay the
balance, Land Bank must suffer its loss caused by its negligent employee. It advised Land Bank to pursue
its employee for reimbursement instead.
RTC: Land Bank appealed the Decision of the MTCC before the Regional Trial Court (RTC) which,
in tum, reversed the same and ruled that Articles 19, 22, and 1456 of the Civil Code of the Philippines
(Civil Code) are applicable to the case. It held that if Catadman had observed honesty and good faith as
required by the said provisions, he should have returned the amount of P115,002.68 instead of keeping
quiet about receiving the money. It also ruled that since Catadman knew that the money was not his,
Article 1456 obliges him as a trustee to take care of the money which through mistake came into his
hands.
CA: Catadman filed a petition for review before the CA assailing the decision of the RTC which
reversed the decision of the MTCC.
Primarily anchoring its decision on the negligence of the bank employee and the fiduciary nature of
Land Bank's business, the CA ruled that Land Bank must, as a consequence, bear its loss. In explaining
its decision, the CA quoted the ruling in the case in another case decided by the Supreme Court in which
it cited the ruling in the landmark case of Simex International. Particularly basing its decision on the role
of the banks in the economic life of every civilized nation, the CA held that to allow Land Bank to secure
a reimbursement of the subject amount would open the floodgates of public distrust in the banking
industry.
11
ISSUE: Whether the Honorable Court of Appeals erred in not finding the petitioner liable for the full
amount mistakenly credited despite concluding that the latter was unjustly enriched at the expense of
Land Bank and acted in bad faith. (YES.)
RULING: The Supreme Court said that Catadman, as a depositor, did not suffer any financial loss or
damage when his account was credited with an additional ₱115,002.68. It was the bank which suffered
the loss albeit it was primarily caused by the negligent act of its employee. Truth be told, however, that
Catadman was unjustly enriched when he chose to not return and just appropriated to himself the
₱115,002.68 knowing fully well that the same does not belong to him. Under Article 22 of the Civil
Code, "every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall return
the same to him." In this case, the Supreme Court unjust enrichment is present "when a person unjustly
retains a benefit to the loss of another, or when a person retains money or property of another against
the fundamental principles of justice, equity and good conscience." The principle of unjust enrichment
has two conditions. First, a person must have been benefited without a real or valid basis or justification.
Second, the benefit was derived at another person's expense or damage.
The Supreme Court also reprimanded Land Bank for its negligence and it said that this present case shall
serve as a reminder to Land Bank that the law 0imposes on banks high standards in view of the fiduciary
nature of banking. Section 2 of Republic Act (R.A.) No. 8791, and declares that the State recognizes
the "fiduciary nature of banking that requires high standards of integrity and performance."
The obligation of Landbank is to treat the accounts of all its depositors with meticulous care, always
having in mind the fiduciary nature of their relationship. This fiduciary relationship means that the
bank's obligation to observe "high standards of integrity and performance" is deemed written into every
deposit agreement between a bank and its depositor. The fiduciary nature of banking requires banks to
assume a degree of diligence higher than that of a good father of a family. Likewise, Section 2 of R.A.
No. 8791 prescribes the statutory diligence required from banks - that banks must observe "high
standards of integrity and performance" in servicing their depositors.
4. GO V. BSP
G.R. No. G.R. No. 178429, October 23, 2009.
Ponente: BRION, J.
Student Assigned: PUNZALAN
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DOCTRINE: Under Sec. 83 of RA 337, the following elements must be present to constitute a violation
of its 1st paragraph: (1) the offender is a director or officer of any banking institution; (2) the offender,
either directly or indirectly, for himself or as representative or agent of another, performs any of the
following acts: a. he borrows any of the deposits or funds of such bank; or b. he becomes a guarantor, indorser,
or surety for loans from such bank to others, or c. he becomes in any manner an obligor for money borrowed
from bank or loaned by it; (3) the offender has performed any of such acts without the written approval of
the majority of the directors of the bank, excluding the offender, as the director concerned. The essence of the
crime in Sec. 83 is becoming an obligor of the bank without securing the necessary written approval of the
majority of the bank’s directors. The second element merely lists down the various modes of committing the
offense. The third mode serves as a catch-all phrase that covers any situation when a director or officer of
the bank becomes its obligor. The prohibition is directed against a bank director or officer who becomes in
any manner an obligor for money borrowed from or loaned by the bank without the written approval of
the majority of the bank’s board of directors.
To make a distinction between the act of borrowing and guarantying is therefore unnecessary because in
either situation, the director or officer concerned becomes an obligor of the bank against whom the
obligation is juridically demandable. The credit accommodation limit under the 2nd paragraph of Sec.
83 is not an exception nor is it an element of the offense. Sec. 83 imposes three restrictions: Approval,
Reportorial, and Ceiling requirements.
FACTS: Petitioner Jose Go, the Director, President and CEO of the Orient Commercial Banking
Corporation was charged before the RTC Manila for violation of Sec. 83 of RA 337 or the General
Banking Act. Go allegedly borrowed the deposits/funds of the Orient Bank and/or acting as guarantor,
indorser of obligor for loans to other persons. He then used the borrowed deposits/funds in facilitating
and granting of credit lines/loans to the New Zealand Accounts loans. He completed the alleged
transaction without the written approval of the majority of the Board of Directors of Orient Bank. Go
then filed a motion to quash the Information. He averred that the use of the word "and/or" meant that
he was charged for being either a borrower or a guarantor, or both. Thus, the charge do not constitute
an offense because Sec. 83 of RA 337 penalized only directors and officers who acted either as borrower
or as guarantor, but not as both. According to Go, the 2nd par. of Sec. 83, which provides that the
“Monetary Board may regulate the amount of credit accommodations that may be extended to directors
or officers of the bank” serves as an exception to 1st par., provided it is "limited to an amount equivalent
to the respective outstanding deposits and book value of the paid-in capital contribution in the bank."
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The RTC granted Go’s motion. The prosecution filed a petition for certiorari before the CA claiming
that the Information was sufficient and that the word “and/or” did not affect its validity, as it merely
stated a mode of committing the crime penalized by the law. Moreover, the 2nd par. cannot be
interpreted as an exception as it only sets the borrowing limits that, if violated, would render the bank
liable. The CA granted the prosecution’s petition. Hence, this appeal.
ISSUE: Whether Go is liable for violating Sec. 83 of RA 337. (YES.)
RULING: Under Sec. 83 of RA 337, the following elements must be present to constitute a violation
of its 1st paragraph: (1) the offender is a director or officer of any banking institution; (2) the offender,
either directly or indirectly, for himself or as representative or agent of another, performs any of the
following acts: a. he borrows any of the deposits or funds of such bank; or b. he becomes a guarantor,
indorser, or surety for loans from such bank to others, or c. he becomes in any manner an obligor for
money borrowed from bank or loaned by it; (3) the offender has performed any of such acts without
the written approval of the majority of the directors of the bank, excluding the offender, as the director
concerned. A simple reading of the above elements easily rejects petitioner Go’s contention that the law
penalizes a bank director or officer only either for borrowing the bank’s deposits or funds or for
guarantying loans by the bank, but not for acting in both capacities. The Court ruled that the essence
of the crime in Sec. 83 is becoming an obligor of the bank without securing the necessary written
approval of the majority of the bank’s directors. The second element merely lists down the various
modes of committing the offense. The third mode in fact serves as a catch-all phrase that covers any
situation when a director or officer of the bank becomes its obligor. The prohibition is directed against
a bank director or officer who becomes in any manner an obligor for money borrowed from or loaned
by the bank without the written approval of the majority of the bank’s board of directors. To make a
distinction between the act of borrowing and guarantying is therefore unnecessary because in either
situation, the director or officer concerned becomes an obligor of the bank against whom the obligation
is juridically demandable. The Court also ruled that the credit accommodation limit under the 2nd
paragraph of Sec. 83 is not an exception nor is it an element of the offense. Contrary to Go’s claims, the
second paragraph of Sec. 83 does not provide for an exception to a violation of the first paragraph
thereof, nor does it constitute as an element of the offense charged. Sec. 83 actually imposes three
restrictions: Approval, Reportorial, and Ceiling requirements: 1. The approval requirement (found in
the first sentence of the first paragraph of the law) refers to the written approval of the majority of the
bank’s board of directors required before bank directors and officers can in any manner be an obligor
for money borrowed from or loaned by the bank. Failure to secure the approval renders the bank
director or officer concerned liable for prosecution and, upon conviction, subjects him to the penalty
provided in the third sentence of first paragraph of Sec. 83. 2. The reportorial requirement, on the other
14
hand, mandates that any such approval should be entered upon the records of the corporation, and a
copy of the entry be transmitted to the appropriate supervising department. The reportorial
requirement is addressed to the bank itself, which, upon its failure to do so, subjects it to quo warranto
proceedings under Sec. 87 of RA 337. 3. The ceiling requirement under the second paragraph of Sec. 83
regulates the amount of credit accommodations that banks may extend to their directors or officers by
limiting these to an amount equivalent to the respective outstanding deposits and book value of the
paid-in capital contribution in the bank. Again, this is a requirement directed at the bank. In this light,
a prosecution for violation of the first paragraph of Section 83, such as the one involved here, does not
require an allegation that the loan exceeded the legal limit. Even if the loan involved is below the legal
limit, a written approval by the majority of the bank’s directors is still required; otherwise, the bank
director or officer who becomes an obligor of the bank is liable. Compliance with the ceiling
requirement does not dispense with the approval requirement. Evidently, the failure to observe the three
requirements under Sec. 83 paves the way for the prosecution of three different offenses, each with its
own set of elements. A successful indictment for failing to comply with the approval requirement will
not necessitate proof that the other two were likewise not observed.
5. SORIANO VS. PEOPLE

G.R. No. 162336, Feb. 1, 2010.
Ponente: DEL CASTILLO, J.
Student Assigned: BALICOCO
DOCTRINE: A bank officer violates the DOSRI law when he acquires bank funds for his personal
benefit, even if such acquisition was facilitated by a fraudulent loan application. The prohibition in
Section 83 is broad enough to cover various modes of borrowing.It covers loans by a bank director or officer
which are made either: (1) directly, (2) indirectly, (3) for himself, (4) or as the representative or agent of
others. It applies even if the director or officer is a mere guarantor, indorser or surety for someone else's loan
or is in any manner an obligor for money borrowed from the bank or loaned by it.
FACTS: Sometime in 2000, the Office of Special Investigation (OSI) of BSP transmitted a letter to
Jovencito Zuño, Chief State Prosecutor of the DOJ. The letter attached five affidavits, which would
allegedly serve as bases for filing criminal charges for Estafa thru Falsification of Commercial
Documents, and for Violation of Section 83 of RA 337, as amended by PD 1795 (General Banking Act),
15
against petitioner Hilario P. Soriano. These five affidavits, along with other documents, stated that
spouses Enrico and Amalia Carlos appeared to have an outstanding loan of ₱8 million with the Rural
Bank of San Miguel (Bulacan), Inc. (RBSM), but had never applied for nor received such loan; that it
was petitioner, who was then president of RBSM, who had ordered, facilitated, and received the
proceeds of the loan; and that the ₱8 million loan had never been authorized by RBSM's Board of
Directors.
The investigating officer issued a Resolution finding probable cause and correspondingly filed two
separate informations against petitioner before the Regional Trial Court (RTC).
It basically alleged that petitioner and his co-accused, in abuse of the confidence reposed in them as
RBSM officers, caused the falsification of a number of loan documents, making it appear that one
Enrico Carlos filled up the same, and thereby succeeded in securing a loan and converting the loan
proceeds for their personal gain and benefit. (Estafa under paragraph 1(b) of Article 315 of the RPC -
Estafa thru falsification of commercial documents)
The other Information was for violation of Section 83 of RA 337, as amended by PD 1795. The said
provision refers to the prohibition against the so-called DOSRI loans. The information alleged that, in
his capacity as President of RBSM, petitioner indirectly secured an ₱8 million loan with RBSM, for his
personal use and benefit, without the written consent and approval of the bank's Board of Directors,
without entering the said transaction in the bank's records, and without transmitting a copy of the
transaction to the supervising department of the bank. His ruse was facilitated by placing the loan in the
name of an unsuspecting RBSM depositor, one Enrico Carlos.
Petitioner filed a Motion to Quash, contending that the commission of estafa under paragraph 1(b) of
Article 315 of the RPC is inherently incompatible with the violation of DOSRI law, hence, a person
cannot be charged for both offenses. He argued that a violation of DOSRI law requires the offender to
obtain a loan from his bank, without complying with procedural, reportorial, or ceiling requirements.
On the other hand, estafa under par. 1(b), Article 315 of the RPC requires the offender to
misappropriate or convert something that he holds in trust, or on commission, or for administration, or
under any other obligation involving the duty to return the same.
RTC: Denied the motion to quash and further held that the two offenses were separate and distinct
violations, hence the prosecution of one did not pose a bar to the other.
CA: The CA found no merit in petitioner's argument that the violation of the DOSRI law and the
commission of estafa through falsification of commercial documents are inherently inconsistent with
each other.
16
ISSUE: Whether a loan transaction within the ambit of the DOSRI law (violation of Section 83 of RA
337, as amended) could also be the subject of Estafa under Article 315 (1) (b) of the Revised Penal Code.
/ Whether or not a charge for DOSRI violation is proper wherein the accused bank officer did not secure
a loan in his own name. (YES.)
RULING: The two informations against petitioner contain allegations which, if hypothetically
admitted, would establish the essential elements of the crime of DOSRI violation and estafa through
falsification of commercial documents.
In Criminal Case No. 238-M-2001 for violation of DOSRI rules, the information alleged that petitioner
Soriano was the president of RBSM; that he was able to indirectly obtain a loan from RBSM by putting
the loan in the name of depositor Enrico Carlos; and that he did this without complying with the
requisite board approval, reportorial, and ceiling requirements.
In Criminal Case No. 237-M-2001 for estafa thru falsification of commercial documents, the
information alleged that petitioner, by taking advantage of his position as president of RBSM, falsified
various loan documents to make it appear that an Enrico Carlos secured a loan of ₱8 million from
RBSM; that petitioner succeeded in obtaining the loan proceeds; that he later converted the loan
proceeds to his own personal gain and benefit; and that his action caused damage and prejudice to
RBSM, its creditors, the BSP, and the PDIC.
In Soriano v. People, involving the same petitioner in this case (but different transactions), we also
reviewed the sufficiency of informations for DOSRI violation and estafa thru falsification of
commercial documents, which were almost identical, mutatis mutandis, with the subject informations
herein. We held in Soriano v. People that there is no basis for the quashal of the informations as "they
contain material allegations charging Soriano with violation of DOSRI rules and estafa thru falsification
of commercial documents".
Petitioner raises the theory that he could not possibly be held liable for estafa in concurrence with
the charge for DOSRI violation. According to him, the DOSRI charge presupposes that he acquired
a loan, which would make the loan proceeds his own money and which he could neither possibly
misappropriate nor convert to the prejudice of another, as required by the statutory definition of
estafa. On the other hand, if the petitioner did not acquire any loan, there can be no DOSRI
violation to speak of. Thus, petitioner posits that the two offenses cannot co-exist. This theory does
not persuade us.
The Court does not agree.
17
The bank money (amounting to ₱8 million) which came to the possession of petitioner was money held
in trust or administration by him for the bank, in his fiduciary capacity as the President of said bank. It
is not accurate to say that the petitioner became the owner of the ₱8 million because it was the proceeds
of a loan. That would have been correct if the bank knowingly extended the loan to the petitioner
himself. But that is not the case here. According to the information for estafa, the loan was supposed to
be for another person, a certain "Enrico Carlos"; petitioner, through falsification, made it appear that
said "Enrico Carlos" applied for the loan when in fact he ("Enrico Carlos") did not. Through such
fraudulent device, the petitioner obtained the loan proceeds and converted the same. Under these
circumstances, it cannot be said that the petitioner became the legal owner of the ₱8 million. Thus,
petitioner remained the bank’s fiduciary with respect to that money, which makes it capable of
misappropriation or conversion in his hands.
Here, the Court also ruled that a charge for DOSRI violation is proper in such a situation wherein the
accused bank officer did not secure a loan in his own name, but was alleged to have used the name of
another person in order to indirectly secure a loan from the bank. Section 83 of RA 337 reads:
Section 83. No director or officer of any banking institution shall, either directly or indirectly,
for himself or as the representative or agent of others, borrow any of the deposits of funds of
such bank, nor shall he become a guarantor, indorser, or surety for loans from such bank to others,
xxx
The prohibition in Section 83 is broad enough to cover various modes of borrowing.It covers loans by
a bank director or officer which are made either: (1) directly, (2) indirectly, (3) for himself, (4) or as the
representative or agent of others. It applies even if the director or officer is a mere guarantor, indorser or
surety for someone else's loan or is in any manner an obligor for money borrowed from the bank or
loaned by it.
The foregoing information describes the manner of securing the loan as indirect; names petitioner as the
benefactor of the indirect loan; and states that the requirements of the law were not complied with. It
contains all the required elements for a violation of Section 83, even if the petitioner did not secure the
loan in his own name.
In sum, the informations filed against the petitioner do not negate each other.
6. APOLINARIO, JR. Y LLAUDER VS. PEOPLE

G.R. No. 242977, October 13, 2021.
Ponente: LEONEN, J.
18
Student Assigned: BASILIO
DOCTRINE: Banking institutions are corporations imbued with public interest. They are required to
exercise the highest degree of diligence. By their nature, banks operate within certain restrictions and
limitations, one of which is the issuance of loans to its directors, officers, stockholders, and related interests
(DOSRI). The requirements under the General Banking Law are straightforward. If all the elements
provided by the law are present, erring directors and officers can be held criminally liable for violating the
DOSRI law.
FACTS: In two separate Informations, Apolinario, Winefredo T. Capilitan (Capilitan), Motohiko

Hagisaka (Hagisaka), and Elmer T. Magpantay (Magpantay), directors and officers of the Unitrust
Development Bank (Unitrust), were charged with violation of Section 36 of Republic Act No. 8791
(The General Banking Law of 2000), in relation to Section 36 of Republic Act No. 7653 (The New
Central Bank Act).
On December 18, 2001, Unitrust held a Special Stockholder's Meeting, wherein Vasquez, Apolinario,
Capilitan, Magpantay, Evelyn Mansit (Mansit), Loreta Oba (Oba) and Quilatan, were elected as
members of Unitrust's Board. On the same day, an Organizational Meeting of the Board of Directors
was held wherein: Unitrust Board of Directors elected Apolinario as Acting Chairman and President;
Capilitan was elected as Corporate Secretary; Magpantay, Quilatan, and Vasquez resigned as members
of the Unitrust Board of Directors; Fujinori Tada (Tada), Hagisaka, and Kiyoshi Haneda (Haneda) were
subsequently elected as directors; and Hagisaka was nominated and elected as the Executive Vice
President. Subsequently, Capilitan applied for a personal loan of P1,000,000.00.
Vasquez, who was then the Vice President of Loans and Credit, informed Hagisaka that without a board
resolution approving the loan, Capilitan's loan application violated the rule on DOSRI loans. Hagisaka
responded that Vasquez should approve Capilitan's loan, or else he would withhold their salaries and
fire them. Vasquez hesitantly processed the P1,000,000.00 loan of Capilitan but insisted that he be
furnished with a board resolution approving it. Atty. Evelyn Gutierrez (Gutierrez), counsel of Unitrust,
then showed Vasquez the Minutes of the Board Meeting dated December 19, 2001 (December 19, 2001
Minutes) where the Board of Directors allegedly approved Capilitan's P1,000,000.00 loan. The
December 19, 2001 Minutes was signed by Quilatan, Vasquez, Magpantay, Apolinario, and Hagisaka.
19
Later, Hagisaka informed Vasquez of another loan application for P27,000,000.00 and filed by G.
Cosmos Philippines, Inc. (G. Cosmos), represented by its President, Capilitan. The Unitrust's Board
allegedly approved the loan application on December 26, 2001 as evidenced by a Board Resolution
(December 26, 2001 Resolution) signed by Magpantay, Apolinario, Capilitan, and Oba.
On the same day and after the two loans were released, Bangko Sentral ng Pilipinas, through a letter
from the Department of Thrift Banks and Non-Bank Financial Institutions, notified Apolinario,
Hagisaka, and Capilitan that the two loans violated the DOSRI law.
Upon review of the documents relating to the two loans, it was discovered that: (1) the loans did not
contain the necessary supporting documents such as loan application/information sheet, disclosure
statement, and board resolution approving the loans; and (2) both loans were effectively unsecured since
they were only secured by Capilitan's Unitrust shares of stock. Also, it was found that the loans were
not reported to the BSP.
BSP then filed a case against the Unitrust directors and officers before the Department of justice. The
Department of Justice found probable cause against Capilitan, Hagisaka, Apolinario, Magpantay,
Quilatan, and Vasquez for violation of DOSRI laws.
The RTC found petitioner Apolinario guilty beyond reasonable doubt of the crimes charged. On
appeal, the CA affirmed the conviction. The CA ruled that all the elements of the crime charged were
established. (1) Apolinario was a director and officer of Unitrust; (2) Apolinario conspired with
Capilitan in obtaining the two loans from Unitrust; (3) the two loans were approved and released
without the valid written approval by the majority of Unitrusts Board; and (4) the required approval of
the Unitrust's Board was not entered into the records of Unitrust, and a copy of the approval was not
transmitted to the Bangko Sentral ng Pilipinas' supervising and examining department.
Petitioner claims that the prosecution failed to prove the elements of the offense and contends that: (1)
he is not a director of Unitrust; (2) he is neither a bank borrower nor did he incur any contractual liability
from the bank for himself or others; (3) he could not have approved the loans as he was neither a
stockholder nor a director but a mere employee of the bank; and (4) assuming that the first three
elements are present, Unitrust could no longer report because of its subsequent closure.
ISSUE: Whether there was a violation of the DOSRI Law. (YES.)
20
RULING: To sustain a conviction for violation of the DOSRI restriction, the prosecution must prove
the existence of the following elements beyond reasonable doubt: (1) the offender is a director or officer
of any banking institution; (2) the offender, either directly or indirectly, for himself or as a representative
or agent of another, performs any of the following acts: (a) he borrows any of the deposits or funds of such
bank; or (b) he becomes a guarantor, indorser, or surety for loans from such bank to others: or (c) he becomes
in any manner an obligor for money borrowed from bank or loaned by it; and (3) the offender has
performed any of such acts without the written approval of the majority of the directors of the bank,
excluding the offender, as the director concerned.
The lower courts found petitioner to be a bona fide Unitrust director. Accused Apolinario miserably
failed to deny and rebut the positive declaration of Mr. Quilatan that during the stockholders' meeting
held on December 18, 2001, Mr. Quilatan nominated accused Apolinario, as the Acting Chairperson
of Unitrust and that on the same Board Meeting, accused Apolinario was elected as the Acting President.
Further, it must be underscored that while petitioner insists that the board meetings were simulated, he
never denied signing the Minutes of the Board Meetings approving the two loans.
The December 19, 2001 Minutes approving the P1,000,000.00 loan contained the signatures of
petitioner, Magpantay, Quilatan, and Vasquez. On the other hand, the signatures appearing on the
December 26, 2001 Minutes approving the P27,000,000.00 loan were those of petitioner, Capilitan,
Magpantay, and Oba.
It was also ruled that petitioner acted in conspiracy with Capilitan. First, petitioner does not dispute
that Capilitan, a Unitrust director, obtained two loans from Unitrust. While petitioner denies
participation in the loan's approval and insists that it was Vasquez who approved the loan, it has been
established that Vasquez approved the loans under duress. Further, petitioner admitted that the Vice
President for Loans and Credit merely recommends a loan's approval and the final decision rests on the
board. Accordingly, since petitioner signed the minutes of the board meetings during which the loans
were allegedly approved, he had the "principal and indispensable role" in their approval and release.
Second, petitioner admitted that after the Bangko Sentral ng Pilipinas investigation and the bank run,
he contacted Magpantay to pay PDIC the P13,000,000.00 loan of G. Cosmos.
Finally, as the RTC and CA correctly pointed out, petitioner is a lawyer who is presumed to know the
law. This notwithstanding, he signed the minutes of the board meetings and participated in the
preparation of the remedial documents after the loans had been released.
21
Under the General Banking Law, for a DOSRI loan to be valid, it is necessary that the written approval
of the majority of the bank's directors be entered into the bank's records. In addition, a copy of the entry
must be transmitted to the appropriate supervising and examining department of the Bangko Sentral ng
Pilipinas.
Here, petitioner does not deny that the loans were not reported to the Bangko Sentral ng Pilipinas.
However, he claims that they could not have met this requirement because of BSP and PDIC’s
subsequent takeover of Unitrust. He argues that the takeover effectively dissolved Unitrust's operations,
making it impossible for them to report the loans to Bangko Sentral ng Pilipinas. He also maintains that
since Dela Paz was then assigned as an examiner at Unitrust from October 2001 until January 2002, he
should have been aware of the loans' existence.
It must be stressed that the responsibility of entering upon its records the required written approval and
of transmitting a copy of the entry to the Bangko Sentral ng Pilipinas is on the subject bank, which in
this case is Unitrust. While Dela Paz, a Bangko Sentral ng Pilipinas Assisting Examiner, was then assigned
at Unitrust at the time material to this case, his job was to monitor the transfer of ownership from the
previous owners of Bank of Makati to the Japanese group. Accordingly, his presence at Unitrust alone
cannot equate to his knowledge of the circumstances surrounding the two loans. Further, assuming that
Dela Paz had acquired information regarding these loans, Unitrust still had the duty to comply with the
reportorial requirements of the law.
The conviction of the petitioner is affirmed.
7. THE CENTRAL BANK OF THE PHILIPPINES VS. CA AND TRIUMPH SAVINGS

BANK
G.R. No. 76118, March 30, 1993.
Ponente: BELLOSILLO, J.
Student Assigned: BAUZON
Topic under the Syllabus: The New Central Bank Act
DOCTRINE: The "close now and hear later" scheme is grounded on practical and legal considerations to
prevent unwarranted dissipation of the bank's assets and as a valid exercise of police power to protect the
depositors, creditors, stockholders and the general public. The absence of notice and hearing cannot be
22
deemed acts of arbitrariness and bad faith, and is therefore, not a valid ground to annul a Monetary
Board resolution placing a bank under receivership.
FACTS: Based on examination reports submitted by the Supervision and Examination Sector of the
Central Bank (CB) "that the financial condition of TSB is one of insolvency and its continuance in
business would involve probable loss to its depositors and creditors," the Monetary Board (MB) issued
Resolution No. 596 ordering the closure of TSB, and placing it under receivership, and appointing
Ramon V. Tiaoqui as receiver.
TSB filed a complaint with the RTC against Central Bank and Ramon V. Tiaoqui to annul MB
Resolution No. 596, challenging the constitutionality of Sec. 29 of R.A. 269, insofar as it authorizes the
Central Bank to take over a banking institution even if it is not charged with violation of any law or
regulation, much less found guilty thereof.
The trial court temporarily restrained petitioners from implementing MB Resolution No. 596, thus
prompting them to move for the quashal of the restraining order on the ground that it did not comply
with Sec. 29, i.e., that TSB failed to show convincing proof of arbitrariness and bad faith on the part of
petitioners;' and, that TSB failed to post the requisite bond in favor of Central Bank.
The trial court granted the relief sought and denied the application of TSB for injunction. Thus, TSB
filed a petition for certiorari before the SC.
Petitioners filed a motion to dismiss premised on two grounds, namely, that the complaint failed to state
a cause of action and that the Triumph Savings Bank was without capacity to sue except through its
appointed receiver.
Petitioners claim that it is the essence of Sec. 29 of R.A. 265 that prior notice and hearing in cases
involving bank closures should not be required since in all probability a hearing would not only cause
unnecessary delay but also provide bank "insiders" and stockholders the opportunity to further dissipate
the bank's resources, create liabilities for the bank up to the insured amount of P40,000.00, and even
destroy evidence of fraud or irregularity in the bank's operations to the prejudice of its depositors and
creditors. Petitioners further argue that the legislative intent of Sec. 29 is to repose in the Monetary
Board exclusive power to determine the existence of statutory grounds for the closure and liquidation
of banks, having the required expertise and specialized competence to do so.
ISSUES:
23
I. Whether absence of prior notice and hearing be considered acts of arbitrariness and bad faith sufficient
to annul a Monetary Board resolution enjoining a bank from doing business and placing it under
receivership. (NO.)
II. Whether it is only the receiver that may bring suit in behalf of the bank. (NO.)
RULING:
I. Under Sec. 29 of R.A. 265, the Central Bank, through the Monetary Board, is vested with exclusive
authority to assess, evaluate and determine the condition of any bank, and finding such condition to be
one of insolvency, or that its continuance in business would involve probable loss to its depositors or
creditors, forbid the bank or non-bank financial institution to do business in the Philippines; and shall
designate an official of the CB or other competent person as receiver to immediately take charge of its
assets and liabilities.
Sec. 29 does not contemplate prior notice and hearing before a bank may be directed to stop operations
and placed under receivership. However, Sec. 29 does not altogether divest a bank or a non-bank
financial institution placed under receivership of the opportunity to be heard and present evidence on
arbitrariness and bad faith because within ten (10) days from the date the receiver takes charge of the
assets of the bank, resort to judicial review may be had by filing an appropriate pleading with the court.
The law is explicit as to the conditions prerequisite to the action of the Monetary Board to forbid the
institution to do business in the Philippines and to appoint a receiver to immediately take charge of the
bank's assets and liabilities. They are: (a) an examination made by the examining department of the
Central Bank; (b) report by said department to the Monetary Board; and (c) prima facie showing that
its continuance in business would involve probable loss to its depositors or creditors.
Banks are affected with public interest because they receive funds from the general public in the form
of deposits. It is then the Government's responsibility to see to it that the financial interests of those who
deal with the banks and banking institutions, as depositors or otherwise, are protected. That task is
delegated to the Central Bank. Under both the 1987 Constitutions, the Central Bank is tasked with
providing policy direction in the areas of money, banking and credit; corollarily, it shall have supervision
over the operations of banks (Sec. 20, Art. XII, 1987 Constitution).
II. To rule that only the receiver may bring suit in behalf of the bank is, to echo the respondent appellate
court, "asking for the impossible, for it cannot be expected that the master, the CB, will allow the receiver
it has appointed to question that very appointment." Consequently, only stockholders of a bank could
24
file an action for annulment of a Monetary Board resolution placing the bank under receivership and
prohibiting it from continuing operations.
In Central Bank v. Court of Appeals, the Court explained the purpose of the law —
“. . . in requiring that only the stockholders of record representing the majority of the capital stock
may bring the action to set aside a resolution to place a bank under conservatorship is to ensure that
it be not frustrated or defeated by the incumbent Board of Directors or officers who may
immediately resort to court action to prevent its implementation or enforcement. It is presumed
that such a resolution is directed principally against acts of said Directors and officers which place
the bank in a state of continuing inability to maintain a condition of liquidity adequate to protect
the interest of depositors and creditors. Indirectly, it is likewise intended to protect and safeguard
the rights and interests of the stockholders. Common sense and public policy dictate then that the
authority to decide on whether to contest the resolution should be lodged with the stockholders
owning a majority of the shares for they are expected to be more objective in determining whether
the resolution is plainly arbitrary and issued in bad faith.”
8. BF SAVINGS BANK VS. MB

G.R. No. 70054 and 68878, Dec 11, 1991, 204 SCRA 767.
Ponente: MEDIALDEA, J.
Student Assigned: BERNARDO
Topic under the Syllabus: New Central Bank Act
DOCTRINE: Section 29 of the Republic Act No. 265, as amended known as the Central Bank Act,
provides that when a bank is forbidden to do business in the Philippines and placed under receivership, the
person designated as receiver shall immediately take charge of the bank's assets and liabilities, as
expeditiously as possible, collect and gather all the assets and administer the same for the benefit of its
creditors, and represent the bank personally or through counsel as he may retain in all actions or
proceedings for or against the institution, exercising all the powers necessary for these purposes including,
but not limited to, bringing and foreclosing mortgages in the name.
FACTS: This refers to nine (9) consolidated cases concerning the legality of the closure and receivership
of petitioner Banco Filipino Savings and Mortgage Bank (Banco Filipino for brevity) pursuant to the
order of respondent Monetary Board.
25
Banco Filipino Savings and Mortgage Bank was authorized to operate as such under M.B. Resolution
No. 223 dated February 14, 1963. It commenced operations on July 9, 1964. It has eighty-nine (89)
operating branches, forty-six (46) of which are in Manila, with more than three (3) million depositors.
Petitioner Bank had an approved emergency advance of P119.7 million under M.B. Resolution No. 839
dated June 29, 1984. This was augmented with a P3 billion credit line under M.B. Resolution No. 934
dated July 27, 1984. On the same date, the respondent Board issued M.B. Resolution No. 955 placing
petitioner bank under conservatorship. Subsequently, a report was submitted to the Monetary Board
by Ramon Tiaoqui, Special Assistant to the Governor and Head, SES Department II of the Central
Bank, regarding the major findings of examination on the financial condition of petitioner BF. The
Tiaoqui Report recommended that Banco Filipino cease its operations and it be declared insolvent. The
Monetary Board (MB) placed Banco Filipino under conservatorship and later issued MB Resolution
No. 75 ordering its closure. Petitioner BF filed a complaint with the Regional Trial Court to set aside
the action of the Monetary Board placing BF under receivership.
ISSUE: Whether the placement under receivership and subsequent closure of Banco Filipino was
justified. (NO.)
RULING: Tiaoqui based his report on an incomplete examination of petitioner bank and outrightly
concluded therein that the latter’s financial status was one of insolvency or illiquidity.
In the instant case, the basic standards of substantial due process were not observed. Time and time
again, the Court has held in several cases that the procedure of administrative tribunals must satisfy the
fundamentals of fair play and that their judgment should express a well-supported conclusion. The test
of insolvency laid down in Section 29 of the Central Bank Act is measured by determining whether the
realizable assets of a bank are less than its liabilities. Hence, a bank is solvent if the fair cash value of all
its assets, realizable within a reasonable time by a reasonable prudent person, would equal or exceed its
total liabilities exclusive of stock liability; but if such fair cash value so realizable is not sufficient to pay
such liabilities within a reasonable time, the bank is insolvent. Examination apprises the soundness of
the institution’s assets, the quality and character of management and determines the institution’s
compliance with laws, rules and regulations. Audit is a detailed inspection of the institution’s books,
accounts, vouchers, ledgers, etc. to determine the recording
of all assets and liabilities. Hence, examination concerns itself with review and appraisal, while audit
concerns itself with verification.
9. CENTRAL BANK OF THE PHILS. V. CA
26
G.R. No. 88353, May 8, 1992, 208 SCRA 652, 684-685
Ponente: DAVIDE, JR., J.
Student Assigned: BILGERIA
DOCTRINE: The following requisites must be present before the order of conservatorship may be set aside
by a court: (1) The appropriate pleading must be filed by the stockholders of record representing the majority
of the capital stock of the bank in the proper court; (2) Said pleading must be filed within ten (10) days
from receipt of notice by said majority stockholders of the order placing the bank under conservatorship;
and (3) There must be convincing proof, after hearing, that the action is plainly arbitrary and made in
bad faith. In the instant case, the original complaint was filed more than 3 years after PRODUCERS
BANK was placed under conservator, long after the expiration of the 10-day period mentioned in the
requisites.
FACTS: Producers bank of the Philippines has been extending questionable loans worth 300 million
without collaterals, but the paid in capital of Producers bank is only 140.544 million, which means that
the entire paid-in capital of the bank, together with some 160 million of depositors' money, was utilized
by Producers bank management to fund these unsecured loans.
Sometime later, several blind items about a family-owned bank in Binondo which granted fictitious
loans to its stockholders appeared in major newspapers which triggered a bank-run in Producers bank
and resulted in continuous over-drawings on the bank’s demand deposit account with the Central Bank;
reaching to 143.955 million which resulted in continuous over-drawings on the bank’s demand deposit
account with the Central bank. The over-drawings’ continued increase prompted the Monetary board
to place Producers bank under conservatorship on the basis of the report submitted by the Supervision
and Examination Sector.
The bank sent a rehabilitation plan to the central bank which states that 3 buildings owned by Producers
Properties, Inc. (PPI), its principal stockholder and the subsequent mortgage of said properties to the
CENTRAL BANK as collateral for the bank’s overdraft obligation but which was not approved due to
disagreements between the parties. No other rehabilitation plan was submitted in over 3 years and this
prompted the Central bank monetary board to approve in principle what it considered a viable
rehabilitation program for PRODUCERS BANK. There being no response from both PRODUCERS
27
BANK and PPI on the proposed rehabilitation plan, the MONETARY BOARD issued a resolution
instructing Central Bank management to advise the bank that the conservatorship may be lifted if
PRODUCERS BANK complies with certain conditions.
Producers bank then filed a complaint with the Regional Trial Court of Makati against the Monetary
board and central bank Governor alleging that the resolutions issued were arbitrary and made in bad
faith and that their placement under conservatorship was unwarranted, ill motivated, illegal and utterly
unnecessary and unjustified. Respondent Judge issued a temporary restraining order and subsequently
a writ of preliminary injunction. The Central bank filed a motion to dismiss but was denied and ruled
that the Monetary board resolutions were arbitrarily issued. Central bank filed a petition for certiorari
before the Court of Appeals seeking to annul the orders of the trial court but CA affirmed the order of
the RTC
ISSUE: Whether the Producers bank was deprived of due process before being placed in
conservatorship. (NO.)
RULING: The following requisites must be present before the order of conservatorship may be set
aside by a court: (1) The appropriate pleading must be filed by the stockholders of record representing
the majority of the capital stock of the bank in the proper court; (2) Said pleading must be filed within
ten (10) days from receipt of notice by said majority stockholders of the order placing the bank under
conservatorship; and (3) There must be convincing proof, after hearing, that the action is plainly
arbitrary and made in bad faith. In the instant case, the original complaint was filed more than 3 years
after PRODUCERS BANK was placed under conservator, long after the expiration of the 10-day
period mentioned in the requisites.
Further, the fact that Producers bank is grossly overdrawn on its reserve account with the Central bank
which increased over the years amounting to 1.233 billion is not disputed. This enormous overdraft
evidences the patent inability of the bank’s management to keep Producers bank liquid. This fact alone
sufficiently justifies the remedial measures taken by the Monetary Board.
The Monetary board Resolutions were not promulgated to arbitrarily divest the present stockholders of
control over PRODUCERS BANK, as is claimed by the latter. The same contemplates an effective and
viable plan to revive and restore PRODUCERS BANK. It is to be noted that before issuing these
resolutions, the MONETARY BOARD gave the management of PRODUCERS BANK ample
opportunity to submit a viable rehabilitation plan for the bank. MB Resolution Nos. 751 merely
reiterated the requirement set forth in Resolution No. 649 for PRODUCERS BANK to identify and
submit the list of new stockholders who will infuse new capital into the bank for CENTRAL BANK
28
approval. In this Resolution, the MONETARY BOARD gave PRODUCERS BANK’s stockholders
one (1) week from notice within which to signify their acceptance or rejection of the proposed
rehabilitation plan.
The foregoing resolutions refer to a recommended rehabilitation plan. What was conveyed to
PRODUCERS BANK was a mere proposal. There was nothing in the resolutions to indicate that the
plan was mandatory. On the contrary, PRODUCERS BANK was given a specific period within which
to accept or reject the plan. And, as petitioners correctly pointed out, the plan was not self-
implementing. The warning given by the MONETARY BOARD that should said proposal be rejected,
the CENTRAL BANK “will take appropriate alternative actions on the matter,” does not make the
proposed rehabilitation plan compulsory.
Whether or not there is a rehabilitation plan agreed upon between PRODUCERS BANK and the
MONETARY BOARD, the CENTRAL BANK is authorized under R.A. No. 265 to take appropriate
measures to protect the interest of the bank’s depositors as well as of the general public. There is nothing
objectionable to the actions of the MONETARY BOARD. We, therefore, find to be completely
without legal or evidentiary basis the contention that the impugned resolutions are arbitrary, illegal and
made in bad faith.
10. RURAL BANK OF SAN MIGUEL, INC. V. MONETARY BOARD

G.R. No. 150886, February 16, 2007.
Ponente: CORONA, J.
Student Assigned: CAAGBAY
DOCTRINE: It is well-settled that the closure of a bank may be considered as an exercise of police power.
The action of the MB on this matter is final and executory. Such exercise may nonetheless be subject to
judicial inquiry and can be set aside if found to be in excess of jurisdiction or with such grave abuse of
discretion as to amount to lack or excess of jurisdiction.
FACTS: Monetary Board (MB), the governing board of respondent Bangko Sentral ng Pilipinas (BSP),
issued Resolution No. 105 prohibiting RBSM from doing business in the Philippines, placing it under
receivership and designating respondent Philippine Deposit Insurance Corporation (PDIC) as receiver
on the basis of the comptrollership reports of the banks supervising head. To assist its impaired liquidity
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and operations, the RBSM was granted emergency loans on different occasions in the aggregate amount
of P375. As early as November 18, 1998, Land Bank of the Philippines (LBP) advised RBSM that it will
terminate the clearing of RBSM’s checks in view of the latter’s frequent clearing losses and continuing
failure to replenish its Special Clearing Demand Deposit with LBP. The BSP interceded with LBP not
to terminate the clearing arrangement of RBSM to protect the interests of RBSM’s depositors and
creditors. On the basis of reports prepared by PDIC stating that RBSM could not resume business with
sufficient assurance of protecting the interest of its depositors, creditors and the general public, the MB
passed Resolution No. 966 directing PDIC to proceed with the liquidation of RBSM under Section 30
of RA 7653.
ISSUE: Whether the Monetary Board can unilaterally close a bank without prior hearing. (NO.)
RULING: It is well-settled that the closure of a bank may be considered as an exercise of police power.
The action of the MB on this matter is final and executory. Such exercise may nonetheless be subject to
judicial inquiry and can be set aside if found to be in excess of jurisdiction or with such grave abuse of
discretion as to amount to lack or excess of jurisdiction.
This case essentially boils down to one core issue: whether Section 30 of RA 7653 (also known as the
New Central Bank Act) and applicable jurisprudence require a current and complete examination of
the bank before it can be closed and placed under receivership. The actions of the Monetary Board taken
under this section or under Section 29 of this Act shall be final and executory, and may not be restrained
or set aside by the court except on petition for certiorari on the ground that the action taken was in
excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction.
The petition for certiorari may only be filed by the stockholders of record representing the majority of
the capital stock within ten (10) days from receipt by the board of directors of the institution of the
order directing receivership, liquidation or conservatorship.
11. BANGKO SENTRAL NG PILIPINAS V. OFFICE OF THE OMBUDSMAN

G.R. No. 201069, June 16, 2021.
Student Assigned: CARIAS
30
DOCTRINE: To be permissible under Section 27(d), loans taken out by BSP personnel with institutions
undergoing BSP examination must now satisfy three requisites: 1) conduct of the transaction on arm's
length basis; 2) full disclosure to the Monetary Board; and 3) compliance with rules and regulations
prescribed by the Monetary Board
The arm's length standard adopted in Section 27(d) means that BSP personnel must transact with BSP-
examined institutions in such a way that they will not be able to utilize their position to gain undue
influence with, or more favorable terms from, the target institution.
FACTS: Benjamin Jamarabo was a former Bank Officer I in the BSP’s Supervision and Examination
Sector. Rural Bank of Kiamba Sarangani was under an examination by the BSP. During the period of
examination, Jamorabo took out an unsecured loan in the amount of P200,000 with Rural Bank of
Kiamba. Since the amount was beyond the authority of the General Manager Nero to approve, Nero
accompanied Jamorabo to meet with Rural Bank of Kiamba’s president, Falgui. Falgui wanted to deny
the loan application, but he was afraid to do so, for fear of offending Jamorabo. Jamorabo signed the
loan documents as co-maker with his wife as the principal but it was Jamorabo who filled out and signed
the loan document in the name of his wife. The loan became due Jamorabo was able to pay only his first
and second amortization and only after his first check had already bounced for being drawn against
insufficient funds. The third amortization became due and he called the bank cashier advising her not
to deposit his check for the 3rd amortization. Then, his communication with the bank suddenly stopped
even after his 4th amortization became due. Mr. Nero decided to deposit Jamorabo’s check but it was
dishonored because the account was already closed. Nero tried calling Jamorabo but Jamorabo can no
longer be contacted. Jamorabo later contacted Nero informing him that he was sent to Malaysia for
further studies by the BSP and promised that he would settle his loan obligation. Jamorabo however did
not make good of his promise. The Anti-Money Laundering Specialist of the BSP conducted a regular
examination of Rural Bank of Kiamba. Nero divulged Jamorabo’s loan to the examiner in charge. The
examiner in charge informed Nero that Jamorabo had just retired and advised him to write to the BSP’s
Financial Accounting Department requesting assistance in deducting from Jamorabo’s retirement
benefits the outstanding balance of his loan. Bangko Sentral filed a complaint against Jamorabo for
violation of Section 27 (d) of RA 7653.
ISSUE: Whether Jamarobo violated Section 27 (d) of RA 7653 as amended by RA 11211. (YES.)
RULING: To be permissible under Section 27(d), loans taken out by BSP personnel with institutions
undergoing BSP examination must now satisfy three requisites: 1) conduct of the transaction on arm's
length basis; 2) full disclosure to the Monetary Board; and 3) compliance with rules and regulations
31
prescribed by the Monetary Board. Jamorabo's transaction with the bank does not meet any of these
requisites.
The arm's length standard adopted in Section 27(d) means that BSP personnel must transact with BSP-
examined institutions in such a way that they will not be able to utilize their position to gain undue
influence with, or more favorable terms from, the target institution.
Jamarobo violated the arm’s-length standard. The loan was granted to Jamorabo due to undue
influence. Jamarobo was able to secure the loan due to his position as examiner-in-charge. He applied
for the loan during the examination period, he was granted a loan without security, and the President of
the bank wanted to deny the loan but he was not able to do so for fear of offending Jamarobo.
Jamarobo also did not disclose the loan to the BSP. BSP discovered the loan only after Nero diverged
the loan to the Anti Money Laundering examiner of the BSP and to the Managing Director of the BSP’s
Financial Accounting Department after Jamarobo defaulted in his loan obligation.
Thus, there was a violation of Section 27 (d) of Ra 7653.
12. CITYSTATE SAVINGS BANK V. TERESITA TOBIAS, ET. AL.,

G.R. No. 227990, March 07, 2018.
Ponente: REYES, JR., J.
Student Assigned: COBARTE
DOCTRINE: The bank, in its capacity as principal, may be liable under the doctrine of apparent
authority wherein its liability is solidary with that of his employee. Under the said doctrine, it imposes
liability because of the actions of a principal or an employer in somehow misleading the public into
believing that the relationship or the authority exists. The liability of a bank to third persons for acts done
by its agents or employees is limited to the consequences of the latter’s acts which it has ratified, or those that
resulted in the performance of acts within the scope of actual or apparent authority it has vested.
FACTS: Rolando Robles, a certified public accountant, has been employed with Citystate Savings
Bank since July 1998 then as Accountant-trainee for its Chino Roces Branch. On September 6, 2000,
32
Robles was promoted as acting manager for petitioner's Baliuag, Bulacan branch, and eventually as
manager.
Sometime in 2002, respondent Teresita Tobias, a meat vendor at the Baliuag Public Market, was
introduced by her youngest son to Robles, branch manager of petitioner's Baliuag, Bulacan branch.
Robles persuaded Tobias to open an account with the petitioner, and thereafter to place her money in
some high interest rate mechanism, to which the latter yielded.
Thereafter, Robles would frequent Tobias' stall at the public market to deliver the interest earned by
her deposit accounts in the amount of Php 2,000.00. In turn, Tobias would hand over her passbook to
Robles for updating. The passbook would be returned the following day with typewritten entries but
without the corresponding counter signatures.
Tobias was later offered by Robles to sign-up in petitioner's back-to-back scheme which is supposedly
offered only to petitioner's most valued clients. Under the scheme, the depositors authorize the bank to
use their bank deposits and invest the same in different business ventures that yield high interest. Robles
allegedly promised that the interest previously earned by Tobias would be doubled and assured her that
he will do all the paper work. Lured by the attractive offer, Tobias signed the pertinent documents
without reading its contents and invested a total of Php 1,800,000.00 to petitioner through Robles.
Later, Tobias became sickly, thus she included her daughter and herein respondent Shellidie Valdez, as
co-depositor in her accounts with the petitioner.
In 2005, Robles failed to remit to respondents the interest as scheduled. Respondents tried to reach
Robles but he can no longer be found; their calls were also left unanswered. In a meeting with Robles'
siblings, it was disclosed to the respondents that Robles withdrew the money and appropriated it for
personal use. Robles later talked to the respondents, promised that he would return the money by
installments and pleaded that they do not report the incident to the petitioner. Robles however reneged
on his promise. Petitioner also refused to make arrangements for the return of respondents' money
despite several demands.
Respondents filed a Complaint for sum of money and damages against Robles and the petitioner.
Respondents alleged that Robles committed fraud in the performance of his duties as branch manager
when he lured Tobias in signing several pieces of blank documents, under the assurance as bank manager
of petitioner, everything was in order.
RTC: Judgment is hereby rendered ordering defendant Robles to pay plaintiff.
33
The plaintiffs claim for attorney's fees and litigation expenses are DENIED for lack of merit. Further,
defendant bank is absolved of any liability. Likewise, all counterclaims and cross-claims are DENIED
for lack of merit.
CA: Reversed and set aside the RTC's decision.
ISSUE: Whether CSB can be held liable for the transactions entered into by Robles, as its bank manager,
with Tobias, as depositor. (YES.)
RULING: CSB is solidarily liable to Tobias and Valdez for the damages caused by the acts of Robles as
its employer.
The bank, in its capacity as principal, may be liable under the doctrine of apparent authority wherein its
liability is solidary with that of his employee. Under the said doctrine, it imposes liability because of the
actions of a principal or an employer in somehow misleading the public into believing that the
relationship or the authority exists. The liability of a bank to third persons for acts done by its agents or
employees is limited to the consequences of the latter’s acts which it has ratified, or those that resulted
in the performance of acts within the scope of actual or apparent authority it has vested.
In this case, the proximate cause of the loss of Tobias is the misappropriation of Robles, but CSB is still
liable under Art. 1911 of the NCC. Art. 1911 Even when the agent has exceeded his authority, the
principal is solidarily liable with the agent if the former allowed the latter to act as though he had full
powers. CSB is estopped in denying Robles’ authority, because, as the branch manager, he is recognized
within his field as to third persons as the general agent and is in general charge of the corporation, with
apparent authority commensurate with the ordinary business entrusted him and the usual course and
conduct thereof. Moreover, the bank admitted the authority of its branch manager to transact outside
of the bank premises. The act of honoring the accounts of Tobias so opened is an acknowledgement by
CSB of the authority of Robles.
13. GOLDWELL PROPERTIES TAGAYTAY, INC. V. METROBANK

G.R. No. 209837, May 12, 2021
Student Assigned: COQUIA
34
DOCTRINE: Escalation clauses are stipulations which allow for the increase of the original fixed interest
rate. In contrast, a floating rate of interest pertains to the interest rate itself that is not fixed as it is
dependent on a market-based reference that was agreed upon by the parties.
The Court explained that "'this BSP requirement is consistent with the principle that the determination of
interest rates cannot be left solely to the will of one party. It further emphasized that the reference rate must
be stated in writing, and must be agreed upon by the parties.
FACTS: The case involves a dispute between Goldwell Properties Tagaytay, Inc., Nova Northstar
Realty Corporation, and NS Nova Star Company, Inc. (collectively referred to as the "petitioners") and
Metropolitan Bank and Trust Company ("Metrobank").
The dispute revolves around the computation of the petitioners' loan obligations.
The petitioners argue that the interest rates and penalty charges imposed by Metrobank were excessive.
Metrobank maintains that the charges were reasonable and that the petitioners willingly executed the
Deeds of Assignment.
Loan Restructuring and Debt Settlement Agreements
The petitioners obtained loans from Metrobank in 2001, secured by real estate mortgages and a
continuing surety agreement.
They requested Metrobank to modify their interest payment scheme from monthly to quarterly due to
financial difficulties.
Metrobank approved the request after a month and a half, but the petitioners claimed that it took
Metrobank four months to reduce the approval in writing, resulting in the accumulation of interest and
their failure to pay.
The parties executed two Debt Settlement Agreements (DSAs) in 2003, which specified the terms and
conditions of the loan restructuring.
35
The DSAs included the capitalization of outstanding past due interest, reduction of interest rates, and
imposition of penalty charges.
The petitioners executed promissory notes and acknowledged their total outstanding obligations in the
DSAs.
Payment Disputes and Default
The petitioners claimed that they made payments until August 2004, but Metrobank clarified that they
only paid the interest amortizations and penalty charges.
The petitioners requested Metrobank to allow them to pay the equivalent loan value of their collaterals
as full payment of the loan, but Metrobank sent demand letters for the payment of their past due
accounts.
The petitioners filed a Complaint for Specific Performance, Accounting, and Damages with the RTC
of Makati, arguing that Metrobank's computation of their obligations was excessive and that the interest
rates and penalty charges were unconscionable.
RTC: The RTC dismissed the complaint, ruling that the charges imposed by Metrobank were
reasonable and that the petitioners' default was not caused by Metrobank's alleged delay. RTC held that
Metrobank had the right to enforce the terms of the original loan documents, including the imposition
of penalty charges.
CA: The CA affirmed the RTC's decision stating that the interest rates and penalty charges were
reasonable and that the petitioners voluntarily agreed to the terms of the DSAs.
The petitioners appealed to the Supreme Court, arguing for an accounting of their obligations, partial
release of the mortgages, and claiming excessive and unconscionable penalty charges.
ISSUES:
36
1. Whether or not Metrobank should be ordered to make an Accounting of petitioners' obligations
and consider the appraisal values submitted by the two (2) independent appraisal companies in
determining the value of the mortgaged properties. (NO.)
2. Whether or not the penalty charges on both the past due interest and principal amount of obligation
imposed by Metrobank are excessive. iniquitous and unconscionable. (YES.)
RULING:
1.Metrobank could not be compelled to adopt the valuation of the independent appraisers after the
loans have already been obtained.
Petitioners insist that Metrobank's valuations of the mortgaged properties were significantly less than
what the independent appraisers reported. Yet, in a letter dated March 15, 2006, Metrobank clarified
that the sufficiency of properties assigned as collaterals is based on the loan value and not the appraised
value. It emphasized that the total loan value available to the borrower is equivalent to 60% of the
appraised value of its mortgaged properties. Why the petitioners failed to acknowledge this information
and repudiate it with proof is problematic.
The Court agrees with the RTC and the CA that the petitioners had the option to question
Metrobank's the appraised values of the mortgaged properties before they obtained the loans. If they
were not agreeable while Metrobank's valuations, they could have obtained loans from other banking
institutions that will assign values to their collaterals that they are comfortable with. On this score, the
Court has previously held that "when the law does not provide for the determination of the property's
valuation, neither should the courts so require, for our duty limits us to the interpretation of the law,
not to its augmentation." Although this pronouncement pertains to the basis of the bid price of a
mortgaged property that became the subject of foreclosure, by analogy, We can infer that courts cannot
likewise dictate how banks should set the values of mortgaged properties for purposes of loan
acquisition. In this case, the Court cannot compel Metrobank to accept the values pegged by the
independent appraisers as insisted by the petitioners, lest We be suspected of meddling with
management prerogative. Besides, the petitioners only raised this valuation issue after they have already
obtained the loans.
37
Metrobank had the right to enforce the terms of the original loan documents, including the
imposition of penalty charges.
2. The monetary interest rate, penalty interest rate, and imposition of VAT are iniquitous.
While the principle of mutuality of contracts should prevail, Metrobank's valuation and imposition of
the interest rates in the DSAs should still be assessed. "As a principal, condition and an important
component in contracts of loan, interest rates are only allowed if agreed upon by express stipulation of
the parties, and only when reduced into writing. Any change to it must be mutually agreed upon, or it
produces binding effect.
There are two types of interest, namely, monetary interest and compensatory/penalty interest. "Interest
as a compensation fixed by the parties for the use or forbearance of money is referred to as monetary
interest, while interest that may be imposed by law or by courts as penalty for damages is referred to as
compensatory interest." "Accordingly, the right to recover interest arises only either by virtue of a
contract (monetary interest) or as damages for delay or failure to pay the principal loan on which the
interest is demanded (compensatory interest)."
As regards monetary interest, although the parties are "free to stipulate their preferred rate," the
courts are "allowed to equitably temper interest rates that are found to be excessive, iniquitous,
unconscionable, and/or exorbitant." Thus, stipulated interest rates of "three percent (3%) per month
or higher is considered as excessive or unconscionable." Alternatively, as per settled jurisprudence, a 24%
per annum (or 2% per month) rate is not unconscionable. Taking these into account, the interest rate of
14.25% per annum (or 1.1875% per month) upon the principal obligation in the case at bench should,
in theory, be considered as a fair rate.
We repeat and quote the CA's finding that "in the original loan documents, the interest rate was pegged
at 16% [per annum]. In the restructuring of the loan obligation, the past due interest was recomputed
at 12% [per annum], and the interest due under the DSAs was pegged at the rate of 10% [per annum],
repriceable quarterly depending on the prevailing market rate. It was eventually repriced at 14.25% [per
annum], a rate still lower than the originally stipulated interest rate of 16% [per annum]. An interest rate
of 14.25% [per annum] is reasonable."
Similarly, the petitioners' insistence on using the 8% per annum advertised rate based on a news excerpt
cannot be considered, as such interest rate pertained to loans incurred to pay for a property procured
during a public auction and not to a loan contract like in this case. Besides, the loans here were obtained
in 2001 (restructured in 2003) while the advertisement was posted in 2006.
38
However, the fact that these specific rates fall below the 3% per month threshold should not be the only
factor in determining if the monetary interest rate is valid. The basis of the party tasked to impose the
interest rate (Metrobank) and more importantly, the agreement of the other party (petitioners), should
also be considered, notwithstanding the specification that the "prevailing market rate" should be set as a
base point for any recalibration of interest rates. Vasquez v. Philippine National Bank (Vasquez) is
instructive on this matter:
At this juncture, the Court clarifies that there may be instances wherein an interest rate scheme which
does not specifically indicate a particular interest rate may be validly imposed. Such interest rate scheme
refers to what is typically called a floating interest rate system.
In Security Bank Corp. v. Spouses Mercado, the Court explained that floating rates of interest refer
to the variable interest stated on a market-based reference rate agreed upon by the parties.
Stipulations on floating rate of interest differ from escalation clauses. Escalation clauses are
stipulations which allow for the increase of the original fixed interest rate. In contrast, a
floating rate of interest pertains to the interest rate itself that is not fixed as it is dependent
on a market-based reference that was agreed upon by the parties.
In the aforesaid case, citing the Manual of Regulations of Banks (MORB) of the Bangko Sentral ng
Pilipinas (BSP), the Court explained that the BSP allows banks and borrowers to agree on a floating rate
of interest, provided that it must be based on market-based reference rates:
X305.3. Floating rates of interest. The rate of interest on a floating rate loan during each interest period
shall be stated on the basis of Manila Reference Rates (MRRs), T-Bill Rates or other market based
reference rates plus a margin as may be agreed upon by the parties.
The Court explained that "'this BSP requirement is consistent with the principle that the determination
of interest rates cannot be left solely to the will of one party. It further emphasized that the reference
rate must be stated in writing, and must be agreed upon by the parties.' Hence, in order for the concept
of a floating rate of interest to apply, it presupposes that a market-based reference rate is indicated in
writing and agreed upon by the parties. In the aforesaid case, the Court did not deem the interest rate
imposed therein as an imposable floating rate of interest because the 'reference rates are not
contained in writing as required by law and the BSP.'
To stress, it should be noted that the DSAs of Nova and Goldwell, (which had similar provisions), stated
that:
39
d. in addition to the above principal payment, debtor-mortgagor and sureties shall pay interest
at 10% [per annum] for the first year repriceable every quarter thereafter based on the prevailing
market rate plus 10% VAT, which shall be paid in arrears to Metrobank starting October 31,
2003 and every end of the quarter thereafter without need of demand.
In this case, it is understood that the monetary interest rate would be repriced quarterly (after the first
year) based on the prevailing market rate. It is important to note that the provision did not state
which market-based reference would be used by the parties for the repricing. The provision
also did not indicate that the petitioners would be given a written notice as regards the
application of the repriced interest rate and the opportunity to consent to the repricing,
notwithstanding its dependency on the prevailing market rate at the time. As earlier mentioned,
even if the interest rates would be market-based, the reference rate should still be "stated in writing and
must be agreed upon by the parties
Based on the DSAs, Metrobank had the authority to unilaterally apply the "prevailing market rate"
without specifying the market-based reference and securing the written assent of the petitioners, which
is in violation of the principle of mutuality of contracts. For this reason, the repriced monetary interest
of 14.25% per annum should be declared as void. Indeed, the imposition of the monetary interest rate
should not be left solely to the will and control of Metrobank absent the petitioners' express and written
agreement.
CONCLUSION:
The court partially granted the petition and affirmed the decision of the Court of Appeals with
modifications.
The court clarified the computation of the petitioners' loan obligations and specified the applicable
interest rates.
The court stated that the petitioners are not in default yet and ordered them to pay the remaining
amount of the loan obligations based on the valid terms and conditions of the loan agreements.
14. BSP AND CHUCHI FONACIER VS. HON. NINA VALENZUELA, ET. AL.
G.R. No. 184778, Oct. 2, 2009.
Ponente: J. VELASCO, JR.
40
Student Assigned: DU
DOCTRINE: There is no provision of law, no section in the procedures of the Bangko Sentral ng Pilipinas
(BSP) that shows that the BSP is required to give banks copies of the Reports of Examination; Sec. 28 of
Republic Act 7653, or the New Central Bank Act, which governs examinations of banking institutions,
provides that the Report of Examination (ROE) shall be submitted to the Monetary Board (MB) — the
bank examined is not mentioned as a recipient of the ROE.
The actions of the Monetary Board (MB) under Secs. 29 and 30 of Republic Act 7653 “may not be
restrained or set aside by the court except on petition for certiorari on the ground that the action taken was
in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction.”
The banks’ remedy, as stated, is a subsequent one, which will determine whether the closure of the bank was
attended by grave abuse of discretion. Judicial review enters the picture only after the MB has taken action;
it cannot prevent such action by the MB. The threat of the imposition of sanctions, even that of closure, does
not violate their right to due process, and cannot be the basis for a writ of preliminary injunction.
FACTS: The Supervision and Examination Department (SED) of BSP conducted examinations of the
books of certain banks, of which they found certain banks have deficiencies. For this reason, the said
banks were sent a list of findings containing the deficiencies and were then required to undertake
remedial measures which included the infusion of additional capital.
Although some banks claimed that they have made additional capital infusions, Chuchi Fonacier, the
OIC of SED sent letters to the banks informing them that they have failed to carry out the required
remedial measures. The banks then requested that they be given a copy of the Report of Examination
(ROE). In response, Fonacier reiterated the banks’ failure to comply with the directive for additional
capital infusions.
A complaint and writ of preliminary injunction was filed against Fonacier and BSP, among others. The
banks claimed that the failure to furnish them with a copy of the ROE violated their right to due process.
And so, the ROE should be nullified and that the Monetary Board (MB) should be enjoined from acting
on the basis of the said ROEs.
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ISSUE: Whether the injunction against the MB is proper as the respondent banks are entitled to a copy
of the ROE. (NO.)
RULING: A writ of preliminary injunction may only be issued upon a clear showing of an actual
existing right to be protected during the pendency of the principal action.
The banks cannot point to any provision of law which entitles them to a copy of the ROEs. On the
contrary, Sec. 28 of R.A. 7653 (New Central Bank Act) which governs examinations of banking
institutions, provides that the ROE shall be submitted to the MB; the bank examined is not mentioned
as a recipient of the ROE.
The banks cannot claim a violation of their right to due process if they are not provided with copies of
the ROEs. The same ROEs are based on the lists of findings containing the deficiencies which were sent
to the respondent banks. As such, the banks were already made aware of the contents of the ROEs.
Moreover, there exists no necessity to prevent serious damage which would warrant the grant of the
injunctive writ. The actions of the Monetary Board (MB) under Secs. 29 and 30 of Republic Act 7653
“may not be restrained or set aside by the court except on petition for certiorari on the ground that the
action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or
excess of jurisdiction.” The banks’ remedy, as stated, is a subsequent one, which will determine whether
the closure of the bank was attended by grave abuse of discretion. Judicial review enters the picture only
after the MB has taken action; it cannot prevent such action by the MB. The threat of the imposition of
sanctions, even that of closure, does not violate their right to due process, and cannot be the basis for a
writ of preliminary injunction.
The "close now, hear later" scheme is grounded on practical and legal considerations to prevent
unwarranted dissipation of the bank’s assets and as a valid exercise of police power to protect the
depositors, creditors, stockholders, and the general public. The writ of preliminary injunction cannot,
thus, prevent the MB from taking action, by preventing the submission of the ROEs and worse, by
preventing the MB from acting on such ROEs.
The "close now, hear later" doctrine has already been justified as a measure for the protection of the
public interest. Swift action is called for on the part of the BSP when it finds that a bank is in dire straits.
Unless adequate and determined efforts are taken by the government against distressed and mismanaged
banks, public faith in the banking system is certain to deteriorate to the prejudice of the national
economy itself, not to mention the losses suffered by the bank depositors, creditors, and stockholders,
42
who all deserve the protection of the government. The respondent banks have failed to show their
entitlement to the writ of preliminary injunction.
15. BANCO FILIPINO SAVINGS AND MORTGAGE BANK VS. BSP

G.R. No. 200642, April 26, 2021
Student Assigned: DULLAS
DOCTRINE: A bank under receivership can only sue or be sued through its receiver, the PDIC. Thus, a
petition filed on behalf of a bank under receivership that is neither filed through nor authorized by the
PDIC must be dismissed for want of jurisdiction.
FACTS: The Monetary Board issued a resolution on March 17, 2011 placing Banco Filipino under
receivership by PDIC due to Banco Filipino’s inability to continue operating with safety to its depositors
and creditors.
Subsequent to the order of receivership, Banco Filipino filed a petition for certiorari and mandamus
with the Court of Appeals, assailing the latter Board’s Resolution (MB Resolution 372.A).
ISSUE: Whether Banco Filipino, after being placed under receivership, sue and become a party to a suit.
(NO.)
RULING: The Supreme Court (SC) explained that the relief prayed for by Banco Filipino has already
been declared moot and academic in its decision in G.R. No. 200678.
However, in order to shine light on the issue of receivership, the Court proceeded to discuss that a bank
under receivership can only sue or be sued through its receiver (which, in this case, is the PDIC). Thus,
the Court ruled, “a petition filed on behalf of a bank under receivership that is neither filed through nor
authorized by the PDIC must be dismissed for want of jurisdiction.”
Further, the Court said:
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“When a bank is ordered closed and placed under the receivership of PDIC by the Monetary
Board, PDIC is mandated to proceed with the takeover and liquidation of the closed bank.
PDIC shall immediately gather and take charge of all the assets and liabilities of the bank,
administer the same for the benefit of its creditors, and exercise the general powers of a receiver
under the Revised Rules of Court.
In its capacity as the receiver of the closed bank, the PDIC is authorized to perform several
functions in its behalf, including bringing suits to enforce liabilities to or recoveries of the closed
banks, hiring or retaining private counsels as may be necessary, and exercising such other powers
as are inherent and necessary for the effective discharge of the duties of the corporation as a
receiver. In contrast, the powers and functions of the directors, officers, and stockholders of a
closed bank under receivership are deemed suspended upon takeover by the PDIC.”
16. HERMOSA SAVINGS AND LOAN BANK, INC. V. DBP

G.R. No. 222972, February 10, 2021
Ponente: INTING, J.
Student Assigned: GONZALES, Anne Gelique
DOCTRINE: Section 30 of RA 7653 "is curative in character when it declared that the liquidation court
shall have jurisdiction in the same proceedings to assist in the adjudication of the disputed claims against
the Bank." The Court explained that the rationale for consolidating all claims against the bank with the
liquidation court is "to prevent multiplicity of actions against the insolvent bank and x x x to establish due
process and orderliness in the liquidation of the bank, to obviate the proliferation of litigations and to avoid
injustice and arbitrariness." The Court stated that it was the intention, of the lawmaking body "that for
convenience only one court, if possible, should pass upon the claims against the insolvent bank and that the
liquidation court should assist the Superintendent of Banks and regulate his operations."
FACTS: Hermosa Savings and Loan Bank, Inc.(Hermosa Bank) obtained a loan from the National
Economic and Development Authority (NEDA) through the Industrial Guarantee and Loan Fund
(IGLF). Hermosa Bank applied for and was accredited by the Development Bank of the Philippines
(DBP) as a participating financial institution. Then Hermosa Bank applied for IGLF loans relending to
several subborrowers or investment enterprises. DBP approved Hermosa Bank’s loans and released the
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proceeds to the bank. DBP then filed a complaint against Hermosa Bank and its officers for failure to
remit the amortizations due on its IGLF loans and for defrauding on its subsidiary loan.
The BSP examined Hermosa Bank’s account and discovered fraudulent acts in the preparations and
execution of the loans and their collateral documents. DBP prayed for the issuance of writ of
Preliminary Attachment against the properties of all the defendants named in the complaint.
The RTC Branch 136 issued a Writ of Preliminary Attachment, which was later lifted and discharged
but reinstated by the CA. Hermosa Bank was placed under receivership with the PDIC as the appointed
receiver. PDIC filed a petition for assistance in the liquidation of the Hermosa Bank before the
Liquidation Court. The RTC Branch 136 initially dismissed the complaint but reinstated it upon
DBP’s motion for reconsideration. The RTC Branch 136 again dismissed the complaint for lack of
jurisdiction, the ruling was that the Liquidation court has exclusive jurisdiction over all claims against
the Hermosa Bank.
It was reraffled to RTC Branch 57 as the RTC Branch 136 became a family court. The RTC Branch 57
denied DBP’s motion for reconsideration, stating that all assets of Hermosa Bank are in custodia legis
and all claims should be lodged with the Liquidation Court to avoid multiplicity of suits.
DBP then filed an appeal before the CA. The CA reversed and side the Order of the RTC. It ruled that
jurisdiction, once acquired, is not lost upon the instance of the parties; thus it continued until the case
is terminated. Also, that the complaint was not only against HErmosa Bank but also against the Bank
Officers who were impleaded in their personal capacities. Of which the CA ruled that it was not among
the claims that court properly resolved by the Liquidation Court.
ISSUE: Whether the RTC Branch 136 and RTC Branch 57 retained jurisdiction over the complaint
despite the pendency of the petition for assistance in the liquidation of Hermosa Bank before the
Liquidation Court. (NO.)
RULING: The Court held in Barrameda v. Rural Bank of Canaman, Inc, that the rule on adherence
of jurisdiction is not absolute. One of the exceptions to the rule is when the change in jurisdiction is
curative in character. According to the Court, Section 30 of RA 7653 "is curative in character when it
declared that the liquidation court shall have jurisdiction in the same proceedings to assist in the
adjudication of the disputed claims against the Bank." The Court explained that the rationale for
consolidating all claims against the bank with the liquidation court is "to prevent multiplicity of actions
against the insolvent bank and x x x to establish due process and orderliness in the liquidation of the bank,
45
to obviate the proliferation of litigations and to avoid injustice and arbitrariness." The Court stated that
it was the intention, of the lawmaking body "that for convenience only one court, if possible, should pass
upon the claims against the insolvent bank and that the liquidation court should assist the Superintendent
of Banks and regulate his operations."
It is of no moment that the complaint was filed by DBP before the Hermosa Bank was placed under
receivership. The Court had ruled that the time of the filing of the complaint is immaterial as it is the
execution that will obviously prejudice the bank's other depositors and creditors.
To allow the complaint of DBP to proceed outside the Liquidation Court could result to iniquity not
only to Hermosa Bank's depositors who were the most directly affected by its closure, but also to its
other creditors because it would prioritize DBP's claim over their claims. The CA also committed a
reversible error in ruling that the Liquidation Court has no jurisdiction over the bank employees who
are being sued in their personal capacities. Section 30 of RA 7653 gives the liquidation court the
authority to "adjudicate disputed claims against the institution, assist the enforcement of individual
liabilities of the stockholders, directors and officers, and decide on other issues as may be material to
implement the liquidation plan adopted." Hence, the Liquidation Court may resolve the respective
liabilities, if any, of Hermosa Bank's officers pursuant to Section 30 of RA 7653.
CASE NO. 17: SORIANO V. PEOPLE

G.R. No. 240458, January 8, 2020.
Ponente: REYES, JR., J.:
Student Assigned: GONZALES, Alexandria
Topic under the Syllabus: General Banking Act of 2000
DOCTRINE: The prohibition under the DOSRI law is broad enough to cover various modes of
borrowing, viz.: It covers loans by a bank director or officer (like herein petitioner) which are made either:
(1) directly, (2) indirectly, (3) for himself, (4) or as the representative or agent of others. It applies even if
the director or officer is a mere guarantor, indorser or surety for someone else's loan or is in any manner an
obligor for money borrowed from the bank or loaned by it. The covered transactions are prohibited unless
the approval, reportorial and ceiling requirements under Section 83 are complied with.
FACTS: Two separate information were filed against Petitioner Soriano as follows: Criminal Case No.
1719-M-2000 charged petitioner for indirectly borrowing or securing a loan with the Rural Bank of
46
San Miguel, San Miguel Branch, a domestic rural banking institution created, organized and existing
under Philippine Laws, amounting to Ph[P]15 million, knowing fully well that the same has been done
by him without the written consent and approval of the majority of the board of directors of the said
bank, and which consent and approval the said accused deliberately failed to obtain and enter the same
upon the records of said banking institution and to transmit a copy of which to the supervising
department of the said bank as required by the General Banking Act, by using the name of one depositor
VIRGILIO J. MALANG of San Miguel, Bulacan, who have no knowledge of the said loan, and once
in possession of the said amount of Ph[P]14,775,000.00 net of interest, converted the same to his own
personal use and benefit, in flagrant violation of the said law.
The other information, charged Petitioner Soriano and one Rosalinda Ilagan of securing an indirect
loan from Rural Bank of San Miguel (RBSM) while being an officer thereof by falsifying loan
documents and making it appear that a certain Virgilio Malang (Malang) obtained the same, and
thereafter, converting the proceeds for his personal gain and benefit.
To prove the charges, the prosecution presented, aside from pertinent documentary evidence different
witnesses, one of which is Principio, who testified During the general examination, RBSM was found
to have several violations, particularly the grant of loans "without proper and complete loan
documentation" and "clean or unsecured loans were being granted in such a large amount that would
be considered excessive for the substance of needs of the borrowers."
Upon further investigation, it was discovered that on June 27, 1997, RBSM released an unsecured loan
with a principal amount of P15,000,000.00 to Malang, without a co-maker and collateral; without
approval from the Credit Committee or the Board of Directors; and through an incomplete loan
application, the same being signed in blank except for the name and address. Pursuant to the said loan,
Manager's Check No. 01651421 dated June 27, 1997 in the amount of P14,775,000.00 payable to
Malang was released.
Malang, however, denied having applied for and received any proceeds of the said loan. This was
corroborated by an Affidavit executed by Hagan. Instead, Malang testified that he knew petitioner as
the president of RBSM and because they were both stockholders of MRBTI. He narrated that petitioner
encouraged him to apply for a loan and gave him documents to fill up and sign. He, however, withdrew
the application later on due to his wife's objection thereto, and also due to their lawyer's advice that the
loan will not be granted because of the insufficient collateral. He was, thus, surprised to discover that
the loan proceeds were deposited to his purported current account with RBSM, when he does not have
one. Two personal checks with Nos. 012207723 and 012207624 dated July 1, 1997, amounting to
P12,409,791.99 and P2,365,000.00, respectively, payable to himself, were thereafter issued and drawn
47
from the said current account. These checks were then deposited to another purported account of
Malang in MRBTI.
Upon confronting Santillana (another witness for the prosecution), MRBTI's president, about the
deposit, he found out that it was Ilagan, upon petitioner's instruction, who deposited the two checks to
the account.
Despite several opportunities given, the defense failed to file its formal offer of evidence.
Ruling of the lower courts: RTC found petitioner Soriano GUILTY beyond reasonable doubt for
violation of Section 83, R.A. No. 337 as amended by P.D. No. 1795 (General Banking Act), and
GUILTY beyond reasonable doubt of Estafa thru Falsification of Commercial Documents. CA
affirmed. Hence, this petition.
Argument of Petitioner: Petitioner maintains that he did not violate Section 83 of R.A. No. 337, as
amended, or the DOSRI39 law. Specifically, petitioner avers that the prosecution attempted to establish
that he obtained an indirect loan under Malang's name in the net amount of P14,775,000.00 but its
evidence, namely the General Examination Report, refers to a different loan, i.e., his irregular loan
amounting to P34,000,000.00. Petitioner also argues that the prosecution evidence was insufficient to prove
his participation in the commission of the crime of estafa through falsification of commercial documents.
Specifically, petitioner stresses the fact that it was actually Malang who signed the loan application was
established. Further, petitioner points out that as RBSM's president, he was not engaged in frontline services
for him to be able to process loan applications.
ISSUE: Whether petitioner is guilty for violation of Section 83 of R.A. No. 337, as amended. (YES.)
RULING: Petitioner violated Section 83 of R.A. No. 337, as amended.
Violation of the DOSRI Law:
Section 83 of R.A. No. 337, as amended, states:
SEC. 83. No director or officer of any banking institution shall, either directly or indirectly,
for himself or as the representative or agent of others, borrow any of the deposits of funds of
such bank, nor shall he become a guarantor, indorser, or surety for loans from such bank to
others, or in any manner be an obligor for moneys borrowed from the bank or loaned by it,
except with the written approval of the majority of the directors of the bank, excluding the
director concerned. Any such approval shall be entered upon the records of the corporation
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and a copy of such entry shall be transmitted forthwith to the Superintendent of Banks. The
office of any director or officer of a bank who violates the provisions of this section shall
immediately become vacant and the director or officer shall be punished by imprisonment of
not less than one year nor more than ten years and by a fine of not less than one thousand nor
more than ten thousand pesos.
From the foregoing, the following elements must be present to constitute a violation of the above-
quoted provision:
(1) the offender is a director or officer of any banking institution;
(2) the offender, either directly or indirectly, for himself or as a representative or agent of
another, performs any of the following acts:
(a) he borrows any of the deposits or funds of such bank; or
(b) he becomes a guarantor, indorser, or surety for loans from such bank to others; or
(c) he becomes in any manner an obligor for money borrowed from bank or loaned
by it; and
(3) the offender has performed any of such acts without the written approval of the
majority of the directors of the bank, excluding the offender, as the director concerned.
The essence of the crime is becoming an obligor of the bank without securing the necessary written
approval of the majority of the bank's directors. The DOSRI law was enacted as the Congress deemed
it essential to impose certain restrictions on the borrowings undertaken by directors and officers in order
to protect the public, especially the depositors. Such restriction is necessary because of the advantage
these bank officers have because of their position, in acquiring loans or borrowing funds from the bank
funds. Indeed, banks were not created for the benefit of their directors and officers; they cannot use the
assets of the bank for their own benefit, except as may be permitted by law.
As borne by the records, the aforecited elements were established beyond reasonable doubt in this case.
There is no question that petitioner was a director and officer of RBSM, being the president thereof. It
was also established that the subject loan had no approval from RBSM's board of directors. Petitioner,
however, questions the existence of the second element. Petitioner argues that the evidence of the
prosecution was not able to prove that the subject loan under Malang's name, was his indirect loan as
the prosecution evidence pertained to a different loan; nor was the prosecution able to establish that the
alleged proceeds of said loan inured to his benefit to make him an obligor thereof.
49
Contrary to what petitioner attempts to impress to this Court, the General Examination Report was
not the only evidence presented by the prosecution to prove his hand in the indirect loan under Malang's
name. There was no error on the part of the prosecution in finding it relevant to prove petitioner's
previous irregular loans to establish his interest or motive in obtaining the subject indirect loan, i.e., to
apply the same to said previous loans, among others. Indeed, as found by the courts a quo, the
prosecution's evidence was sufficient, not only to prove that petitioner orchestrated the whole process
to obtain the subject loan, but also to prove that the proceeds thereof were used to pay off his previous
irregular loans.
The court further held, that the proceeds of the subject loan did not go "straight to his coffers," as
petitioner points out, is of no moment. The established fact remains that petitioner obtained the subject
indirect loan and used the proceeds thereof to pay his other obligations, among others. To this Court's
mind, it would be absurd for a high-ranking bank officer to orchestrate the processing and acquisition
of a fictitious loan and to deposit the proceeds thereof straight to his personal bank account only to leave
paper trails and put himself at the risk of easy apprehension. Precisely, petitioner resorted to a circuitous
scheme to perpetrate his plan
As held by this Court in the related case of Soriano v. People, the prohibition under the DOSRI law
is broad enough to cover various modes of borrowing, viz.:
It covers loans by a bank director or officer (like herein petitioner) which are made either: (1)
directly, (2) indirectly, (3) for himself, (4) or as the representative or agent of others. It applies
even if the director or officer is a mere guarantor, indorser or surety for someone else's loan or is in any
manner an obligor for money borrowed from the bank or loaned by it. The covered transactions are
prohibited unless the approval, reportorial and ceiling requirements under Section 83 are complied
with. The prohibition is intended to protect the public, especially the depositors, from the
overborrowing of bank funds by bank officers, directors, stockholders and related interests, as such
overborrowing may lead to bank failures. It has been said that "banking institutions are not created for
the benefit of the directors [or officers]. While directors have great powers as directors, they have no
special privileges as individuals. They cannot use the assets of the bank for their own benefit except as
permitted by law. Stringent restrictions are placed about them so that when acting both for the bank
and for one of themselves at the same time, they must keep within certain prescribed lines regarded by
the legislature as essential to safety in the banking business.
A direct borrowing is obviously one that is made in the name of the DOSRI himself or where the
DOSRI is a named party, while an indirect borrowing includes one that is made by a third party, but
the DOSRI has a stake in the transaction. The latter type - indirect borrowing - applies here.
50
Considering all the foregoing established circumstances, we find that the courts a quo correctly ruled
that the prosecution evidence proved beyond reasonable doubt that petitioner, as president of RBSM,
indirectly borrowed or secured a loan with RBSM without the written consent and approval of the
majority of the board of directors, which consent and approval petitioner deliberately failed to obtain,
by using the name of one depositor Malang, the latter having no knowledge of said loan, and thereafter
converted the same to his own personal use and benefit.
18. SPS. CRISTINO AND EDNA CARBONELL VS. METROPOLITAN BANK AND
TRUST COMPANY
G.R. No. 178467, April 26, 2017
Ponente: BERSAMIN, J.
Student Assigned: GUANIO
Topic under the Syllabus: General Banking Act of 2000 / New Central Bank Act
DOCTRINE: The General Banking Act of 2000 demands of banks the highest standards of integrity
and performance. As such, the banks are under obligation to treat the accounts of their depositors with
meticulous care. However, the banks' compliance with this degree of diligence is to be determined in
accordance with the particular circumstances of each case.
In order for gross negligence to exist as to warrant holding the respondent liable therefor, the petitioners
must establish that the latter did not exert any effort at all to avoid unpleasant consequences, or that it
wilfully and intentionally disregarded the proper protocols or procedure in the handling of US dollar notes
and in selecting and supervising its employees.
In every situation of damnum absque injuria, the injured person alone bears the consequences because the
law affords no remedy for damages resulting from an act that does not amount to a legal injury or wrong.
FACTS: Petitioners Sps. Cristino and Edna Carbonell withdrew US$1,000.00 in US$100 notes from
their dollar account at respondent Metrobank’s Pateros branch and traveled to Bangkok, Thailand.
While in Bangkok, they had exchanged five US$100 bills into Baht, but only four of the US$100 bills
had been accepted by the foreign exchange dealer because the fifth one was “no good”.
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Unconvinced by the reason for the rejection, they had asked a companion to exchange the same bill at a
bank in Bangkok, only for the bank teller thereat to inform them that the dollar bill was fake, confiscate
the US$100 bill and threaten to report them to the police.
Using four of the remaining US$100 bills as payment, the petitioners bought jewelry, only to be
confronted by the shop owner at the hotel lobby the next day that their four US$100 bills had turned
out to be counterfeit. The petitioners claim that the shop owner had shouted at them: “You Filipinos,
you are all cheaters!”; and that the incident has occurred within the hearing distance of fellow travellers
and several foreigners.
Upon their return to the Philippines, the petitioners confronted the manager of the respondent’s
Pateros branch on the fake dollar bills, but the latter had insisted that the dollar bills she had released to
them were genuine inasmuch as the bills had come from the head office.
The counsel of the petitioners had submitted the subject US$100 bills to the Bangko Sentral ng Pilipinas
(BSP) for examination and the BSP had certified that the four US$100 bills were near perfect genuine
notes. The petitioners demanded moral damages of P10 Million and exemplary damages. They sent a
written notice to the respondent, attaching the BSP certification and informing the latter that they were
giving it five days within which to comply with their demand, or face court action.
In response, the respondent’s counsel wrote to the petitioners on March 1996 expressing sympathy with
them on their experience but stressing that the respondent could not absolutely guarantee the
genuineness of each and every foreign currency note that passed through its system; that it had also been
a victim like them; and that it had exercised the diligence required in dealing with foreign currency notes
and in the selection and supervision of its employees.
The petitioners filed an action for damages, alleging that they had experienced emotional shock, mental
anguish, public ridicule, humiliation, insults and embarrassment during their trip to Thailand because
of the respondent's release to them of five US$100 bills that later on turned out to be counterfeit.
Prior to the filing of the suit in the RTC, the petitioners had two meetings with the respondent’s
representatives. The latter’s representatives reiterated their sympathy and regret over the troublesome
experience that the petitioners had encountered, and offered to reinstate US$500 in their dollar account,
and, in addition, to underwrite a round-trip all-expense-paid trip to Hong Kong, but the petitioners
were adamant and staged a walk-out.
The RTC ruled in favor of the respondent, dismissing plaintiff’s complaint for lack of merit.
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The petitioners appealed, but the CA affirmed the judgment of the RTC with the modification of
deleting the award of attorney's fees.
ISSUE: Whether respondent Metrobank should be held liable for damages (NO.)
RULING: The General Banking Act of 2000 demands of banks the highest standards of integrity and
performance. As such, the banks are under obligation to treat the accounts of their depositors with
meticulous care. However, the banks' compliance with this degree of diligence is to be determined in
accordance with the particular circumstances of each case.
The petitioners argue that the respondent was liable for failing to observe the diligence required from it
by not doing an act from which the material damage had resulted by reason of inexcusable lack of
precaution in the performance of its duties. Hence, the respondent was guilty of gross negligence,
misrepresentation and bad faith amounting to fraud.
The petitioners' argument is unfounded.
Gross negligence connotes want of care in the performance of one's duties; it is a negligence
characterized by the want of even slight care, acting or omitting to act in a situation where there is duty
to act, not inadvertently but wilfully and intentionally, with a conscious indifference to consequences
insofar as other persons may be affected. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them.
In order for gross negligence to exist as to warrant holding the respondent liable therefor, the petitioners
must establish that the latter did not exert any effort at all to avoid unpleasant consequences, or that it
wilfully and intentionally disregarded the proper protocols or procedure in the handling of US dollar
notes and in selecting and supervising its employees.
The CA and the RTC both found that the respondent had exercised the diligence required by law in
observing the standard operating procedure, in taking the necessary precautions for handling the US
dollar bills in question, and in selecting and supervising its employees. Such factual findings by the trial
court are entitled to great weight and respect especially after being affirmed by the appellate court, and
could be overturned only upon a showing of a very good reason to warrant deviating from them.
It is significant that the BSP certified that the falsity of the US dollar notes in question, which were "near
perfect genuine notes," could be detected only with extreme difficulty even with the exercise of due
53
diligence. Ms. Nanette Malabrigo, BSP's Senior Currency Analyst, testified that the subject dollar notes
were "highly deceptive" inasmuch as the paper used for them were similar to that used in the printing of
the genuine notes. She observed that the security fibers and the printing were perfect except for some
microscopic defects, and that all lines were clear, sharp and well defined.
Here, although the petitioners suffered humiliation resulting from their unwitting use of the counterfeit
US dollar bills, the respondent, by virtue of its having observed the proper protocols and procedure in
handling the US dollar bills involved, did not violate any legal duty towards them. Being neither guilty
of negligence nor remiss in its exercise of the degree of diligence required by law or the nature of its
obligation as a banking institution, the latter was not liable for damages. Given the situation being one
of damnum absque injuria, they could not be compensated for the damage sustained.
19. BANK OF THE PHILIPPINE ISLANDS VS. SPOUSES QUIAOIT

G.R. No. 199562, January 16, 2019
Ponente: CARPIO, J.
Student Assigned: MANGABAT
DOCTRINE: The General Banking Act of 2000 demands of banks the highest standards of integrity
and performance:
Proximate cause is defined as the cause which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces injury and without which the result would not have occurred.
Doctrine of Lasgt clear chance- The doctrine of last clear chance in banking transactions is that the
negligence of the plaintiff does not preclude a recovery for the negligence of the defendant where it
appears that the defendant, by exercising reasonable care and prudence, might have avoided injurious
consequences to the plaintiff notwithstanding the plaintiff’s negligence.
FACTS: Fernando V. Quiaoit (Fernando) maintains peso and dollar accounts with the Bank of the
Philippine Islands (BPI) Greenhills-Crossroads Branch (BPI Greenhills). On 20 April 1999, Fernando,
through Merlyn Lambayong (Lambayong), encashed BPI Greenhills Check No. 003434 for
US$20,000. The dollar bills were handed to Lambayong inside an envelope and in bundles. Lambayong
neither check nor count them.
54
In a complaint filed by Fernando and his wife Nora L. Quiaoit (Nora) against BPI, they alleged that
Nora purchased plane tickets worth US$13,100 for their travel abroad, using part of the US$20,000 bills
withdrawn from BPI.
On 22 April 1999, the spouses Quiaoit left the Philippines for Jerusalem and Europe. Nora handcarried
US$6,900 during the tour. The spouses Quiaoit alleged that Nora was placed in a shameful and
embarrassing situation when several banks in Madrid, Spain refused to exchange some of the US$100
bills because they were counterfeit. Nora was also threatened that she would be taken to the police
station when she tried to purchase an item in a shop with the dollar bills. The spouses Quiaoit were also
informed by their friends, a priest and a nun, that the US dollar bills they gave them were refused by
third persons for being counterfeit. Their aunt, Elisa Galan (Galan) also returned, via DHL, the five
US$100 bills they gave her and advised them that they were not accepted for deposit by foreign banks
for being counterfeit.
The spouses Quiaoit alleged that BPI failed in its duty to ensure that the foreign currency bills it
furnishes its clients are genuine. According to them, they suffered public embarrassment, humiliation,
and possible imprisonment in a foreign country due to BPI’s negligence and bad faith.
BPI countered that it is the bank’s standing policy and part of its internal control to mark all dollar bills
with “chapa” bearing the code of the branch when a foreign currency bill is exchanged or withdrawn.
The dollar bills did not bear the identiying “chapa” from BPI Greenhills and as such, they came from
another source.
The Regional Trial Court ruled in favor of the spouses Quiaoit. Accordingly, BPI and the bank
manager, Nora Gonzales are ordered to pay jointly and severally the Spouses Quiaoit the following:
1. the amount of Four Thousand Four Hundred US Dollars (US$4,400) as and for actual
damages;
2. the amount of Two Hundred Thousand Pesos (P200,000.00) as and for moral damages;
3. the amount of Fifty Thousand Pesos (P50,000.00) as and for exemplary damages;
4. the amount of Fifty Thousand Pesos (P50,000.00) as and for attorney’s fees.
The Court of Appeals affirmed the trial court’s Decision. According to the Court of Appeals, BPI had
been negligent in not listing down the serial numbers of the dollar bills. The Court of Appeals further
ruled that, assuming BPI had not been negligent, it had the last clear chance or the last opportunity to
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avert the injury incurred by the spouses Quiaoit abroad. The Court of Appeals ruled that BPI was the
proximate, immediate, and efficient cause of the loss incurred by the spouses Quiaoit.
ISSUES:
I. Whether BPI exercised due diligence in handling the withdrawal of the US dollar bills. (NO.)
II. Whether the action of BPI is the proximate cause of the loss suffered by the spouses Quiaoit. (YES.)
III. Whether the “Doctrine of last clear chance” applies. (YES.)
IV. Whether the spouses Quiaoit are entitled to moral and exemplary damages and attorney’s fees. (YES.)
RULING:
I. BPI failed to exercise due diligence. In Spouses Carbonell v. Metropolitan Bank and Trust Company
[G.R. No. 178467,26 April2017], the Court emphasized that the General Banking Act of 2000
demands of banks the highest standards of integrity and performance. The Court ruled that banks are
under obligation to treat the accounts of their depositors with meticulous care.
In this case, BPI failed to exercise the highest degree of diligence that is not only expected but required
of a banking institution.
It was established that on 15 April 1999, Fernando informed BPI to prepare US$20,000 that he would
withdraw from his account. The withdrawal, through encashment of BPI Greenhills Check No.
003434, was done five days later, or on 20 April 1999. BPI had ample opportunity to prepare the dollar
bills. Since the dollar bills were handed to Lambayong inside an envelope and in bundles, Lambayong
did not check them. However, as pointed out by the Court of Appeals, BPI could have listed down the
serial numbers of the dollar bills and erased any doubt as to whether the counterfeit bills came from it.
While BPI Greenhills marked the dollar bills with “chapa” to identify that they came from that branch,
Lambayong was not informed of the markings and hence, she could not have checked if all the bills were
marked.
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BPI insists that there is no law requiring it to list down the serial numbers of the dollar bills. However,
it is well-settled that the diligence required of banks is more than that of a good father of a family
[Philippine National Bank v. Spouses Cheah 686 PhiL 760 (2012)]. Banks are required to exercise the
highest degree of diligence in its banking transactions.In releasing the dollar bills without listing down
their serial numbers, BPI failed to exercise the highest degree of care and diligence required of it. BPI
exposed not only its client but also itself to the situation that led to this case. Had BPI listed down the
serial numbers, BPI’s presentation of a copy of such listed serial numbers would establish whether the
dollar bills came from BPI or not.
II. Proximate cause is defined as the cause which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces injury and without which the result would not have occurred.
The action of BPI is the proximate cause of the loss suffered by the spouses Quiaoit. Granting that
Lambayong counted the two bundles of the US$100 bills she received from the bank, there was no way
for her, or for the spouses Quiaoit, to determine whether the dollar bills were genuine or counterfeit.
They did not have the expertise to verify the genuineness of the bills, and they were not informed about
the “chapa” on the bills so that they could have checked the same. BPI cannot pass the burden on the
spouses Quiaoit to verify the genuineness of the bills, even if they did not check or count the dollar bills
in their possession while they were abroad.
III. The Court has also applied the doctrine of last clear chance in banking transactions. In Allied
Banking Corporation v. Bank of the Philippine Islands [705 Phil. 174 (2013)], the Court explained:
The doctrine of last clear chance, stated broadly, is that the negligence of the plaintiff does not preclude
a recovery for the negligence of the defendant where it appears that the defendant, by exercising
reasonable care and prudence, might have avoided injurious consequences to the plaintiff
notwithstanding the plaintiff’s negligence. The doctrine necessarily assumes negligence on the part of
the defendant and contributory negligence on the part of the plaintiff, and does not apply except upon
that assumption. Stated differently, the antecedent negligence of the plaintiff does not preclude him
from recovering damages caused by the supervening negligence of the defendant, who had the last fair
chance to prevent the impending harm by the exercise of due diligence. Moreover, in situations where
the doctrine has been applied, it was defendant’s failure to exercise such ordinary care, having the last
clear chance to avoid loss or injury, which was the proximate cause of the occurrence of such loss or
injury.
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BPI had the last clear chance to prove that all the dollar bills it issued to the spouses Quiaoit were genuine
and that the counterfeit bills did not come from it if only it listed down the serial numbers of the bills.
BPI’s lapses in processing the transaction fall below the extraordinary diligence required of it as a
banking institution. Hence, it must bear the consequences of its action.
IV. Respondents are entitled to moral damages and attorney’s fees but not exemplary damages.
We sustain the award of moral damages to the spouses Quiaoit.

In Pilipinas Bank v. Court of Appeals [304 Phil. 601 (1994)], the Court sustained the award of moral
damages and explained that while the bank’s negligence may not have been attended with malice and
bad faith, it caused serious anxiety, embarrassment, and humiliation to respondents. We apply the same
in this case. In this case, it was established that the spouses Quiaoit suffered serious anxiety,
embarrassment, humiliation, and even threats of being taken to police authorities for using counterfeit
bills. Hence, they are entitled to the moral damages awarded by the trial court and the Court of Appeals.
Nevertheless, we delete the award of exemplary damages since it does not appear that BPI’s negligence
was attended with malice and bad faith. We sustain the award of attorney’s fees because the spouses
Quiaoit were forced to litigate to protect their rights.
20. UNION BANK OF THE PHILIPPINES VS. SY LIAN TENG

G.R. No. 236419, March 17, 2021
Ponente: DELOS SANTOS, J.
Student Assigned: MARCOS
Topic under the Syllabus: General Banking Act of 2000 / New Central Bank Act
DOCTRINE: “Qui per alium facit per seipsum facere videtur", which means “He who does a thing by an
agent is considered as doing it himself.”
The Supreme Court made two points in the case:

1. That the principal is liable for obligations contracted by the agent; and
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2. That banks are expected to exercise the highest degree of diligence in their dealings and
transactions.
FACTS: Raymond Buñag is Union Bank’s (Cubao-Aurora West Branch) branch manager. Buñag came
to know the respondents, the Syliantengs, when he worked as a staff assistant to a branch manager in
Urban Bank (Escolta Branch). When Buñag transferred to UB, he persuaded the Syliantengs to invest
in money market placements.
“To assure themselves that they will be dealing with authorized officers of the bank, the Syliantengs
inquired from UB's Head Office and UB Cubao-Aurora West Branch if Buñag was authorized to offer
and quote rates for Union Bank's money market placements. The inquiries were answered in the
affirmative.” Substantial funds were invested by the Syliantengs through the facilitation of Buñag. There
were withdrawals and several reinvestments and rollovers made by the Syliantengs.
Later, the Syliantengs introduced Buñag to the Tangs who also invested in UB’s money market
placements. The total amount invested by all respondents amounted to millions of pesos. There were
also US dollar placements which the case summarized using a table/chart.
About four years into their transactions and when the placements matured, the respondents sought to
withdraw a portion of the money they invested but they were refused by UB. Their several demands
were fruitless. The respondents reached out to Buñag but he directed them to UB’s Treasury Division,
but the latter informed them that it has no records of the bulk of their placements and that Buñag has
already resigned.
Later, the respondents were included in the investigations conducted by the Presidential Anti-
Organized Crime Task Force against Buñag and were requested to await the outcome of said
investigations. The respondents later learned of the criminal complaints against Buñag (first, qualified
theft, then, economic sabotage). It turns out, Buñag stole money from the bank and from its depositors.
Atty. Macalino, UB’s counsel, informed the respondents that the payment of their investment could
not as yet be effected as UB could not rule out the possibility that respondents and Buñag had connived
in committing the fraud; but this was vehemently denied by the respondents.m
The respondents thought that UB was not sympathetic to their cause, noting that Union Bank has
neither given them any report on the investigation conducted on the incident. Thus, in a letter dated
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2000, respondents demanded for the payment of their investments. However, the demand still went
unheeded. Hence, a complaint for Recovery of Sum of Money with Damages, with prayer for issuance
of a writ of preliminary attachment was filed against UB and Buñag.
In its Answer, UB admitted that it received amounts from the Syliantengs and the Tangs as placements,
but denied any knowledge as to any arrangement agreed upon between the respondents and Buñag.
UB’s Arguments: By way of affirmative defenses, Union Bank admitted that respondents invested a total
of P37,649,788.83 with the bank which were placed in different money market placements. However,
Union Bank claimed that it had made payment to the Syliantengs in the total amount of
P75,415,160.74. Union Bank then contended that considering that the Syliantengs admitted receiving
the amount of P34,037,111.53, the bank had in fact, therefore, overpaid the Syliantengs in the amount
of P32,818,844.89. That the same is also true with the dollar placements made by the Syliantengs.
According to Union Bank, the Syliantengs deposited the total amount US$54,985.57 and that the entire
amount had already been withdrawn by them either in cash or draft.
As to the investments made by the Tangs, Union Bank averred that they invested a total amount of
P15,045,626.54 in the bank's different money market instruments. However, Union Bank claimed that
from January 7, 1999 up to the time that the placements were pre-terminated by Clarita, a total of
P15,061,972.20 had been remitted by the bank to the Tangs. Thus, according to the bank, the claims of
the Tangs had been paid.
Union Bank further alleged that it had not been, in any way, negligent in its banking and accounting
practices as it conducts yearly audits, and that prior to the discovery of the fraud, Union Bank Cubao-
Aurora West Branch passed the audit with flying colors.
According to Union Bank, if it were true that respondents were not paid all the amounts due them, they
have no one to blame but themselves in view of their negligence in trusting millions of pesos with Buñag.
Union Bank added that respondents should have exerted precautions which any depositor would have
taken in the regular course of business, e.g., they would have had their passbooks machine-validated,
they would have had each transaction including the interest and withholding taxes noted in the
passbook, and they would have had transacted over-the-counter, where proper verification of signatures
and validation of the transaction would have passed by at least two different bank employees.
The RTC ruled in favor of the respondents: “the acts of Buñag in the performance of his duties, power,
and authority as officer of Union Bank is binding against the latter, adding that Union Bank was also
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grossly remiss of its duties to exercise the highest degree of diligence, as well as high standards of integrity
and performance in all its transactions.”
The CA also affirmed the RTC Decision: “Union Bank [is] liable for the acts of Buñag as its agent
ratiocinating that a bank is liable for the wrongful acts of its officers done in the interest of the bank or
in the course of dealings of its officers in their representative capacity. The CA rejected Union Bank's
protestation that respondents were negligent in their dealings with the bank and instead found that it
was the bank's inexcusable lapses in the implementation of its internal control system that facilitated the
fraud.”
Finally, UB argued that it cannot be bound by the obligations entered into by Buñag who had exceeded
his powers.
Second, a bank is under obligation to treat the accounts of its depositors with meticulous care, whether
such an account consists only of a few hundred pesos or of millions of pesos. Here, Union Bank cannot
claim that it exercised the degree of care required of it as it was also greatly remiss in its duty to exercise
extraordinary diligence as shown in the following circumstances:
ISSUE: Whether UB is correct in saying that it cannot be bound by the actions of Buñag. (NO.)
RULING: Justice Delos Santos, in his introduction, quoted the Latin maxim “Qui per alium facit per
seipsum facere videtur", which means “He who does a thing by an agent is considered as doing it
himself.”
The Supreme Court made two points in the case:

That the principal is liable for obligations contracted by the agent; and
That banks are expected to exercise the highest degree of diligence in their dealings and transactions.
First, a bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of
dealings of the officers in their representative capacity but not for acts outside the scope of their
authority.
Here, Buñag, as branch manager, was "clothed" or "held out" as having the power to enter into the
subject agreements with respondents. As held uniformly by the RTC and the CA, Buñag, as branch
manager:
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was authorized to solicit investments in money market instruments, such as Certificate of Time Deposit
and Certificate of Participation, from clients;
was allowed to service the marketed clients, such as the respondents, at their respective homes and
offices; and
had the authority to promote banking products and services and to solicit business for the bank from
prospective clients outside of the bank's premises.
First, the CA aptly pointed out that the instruments issued to respondents are accountable forms, the
custody of which is subject to stringent guidelines under the Manual of Regulations for Banks (MORB).
Under Section X185.3(c)(2) of the MORB, such accountable forms are under joint custody, meaning,
the processing of transactions involving accountable forms shall be in the presence of and under direct
supervision of a second person. Both persons shall equally be accountable for the physical protection of
the items and records involved.155 Moreover, physical protection shall be deemed established through
the use of two locks or combinations on a file chest or vault compartment. Certainly, had the rule on
joint custody been observed, Buñag could not have easily perpetrated the fraud by unlawfully using the
bank's accountable forms. Indeed, as rightly put by the CA, there clearly were inexcusable lapses on the
part of Union Bank in implementing its internal control system.
Second, as noted by the CA, most of respondents' investments were made through crossed checks. Thus,
considering that some of these investments were made through crossed checks issued to Union Bank,
and since it admitted receiving and clearing these checks endorsed to it as well, it can be presumed that
the checks were deposited in Union Bank's account and that it underwent the procedure of acceptance
and subsequent clearing with the appropriate officers or employees of the bank. Hence, other bank
officers must have known, or at least are presumed to know, about respondents' investments.
Third, the fact that the embezzlement by Union Bank's branch manager was not immediately discovered
and had spanned for years negates an effective and efficient audit mechanism which is highly expected
of a banking institution considering its fiduciary nature.
21. GOVERNMENT SERVICE INSURANCE SYSTEM vs COURT OF APPEALS

G.R. No. 189206; June 8, 2011
Ponente: PEREZ, J.
Student Assigned: MILA
Topic under the Syllabus: Bank Secrecy Law/Foreign Currency Deposits Act
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DOCTRINE: Republic Act No. 1405 provides for four (4) exceptions when records of deposits may be
disclosed. These are under any of the following instances: a) upon written permission of the depositor, (b) in
cases of impeachment, (c) upon order of a competent court in the case of bribery or dereliction of duty of
public officials or, (d) when the money deposited or invested is the subject matter of the litigation, and e) in
cases of violation of the Anti-Money Laundering Act (AMLA), the Anti-Money Laundering Council
(AMLC) may inquire into a bank account upon order of any competent court. On the other hand, the lone
exception to the non-disclosure of foreign currency deposits, under Republic Act No. 6426, is disclosure upon
the written permission of the depositor.
FACTS: Domsat Holdings Inc., as principal debtor, together with GSIS, as surety, entered into a loan
agreement with Land Bank of the Philippines, Westmont Bank, Tong Yang Merchant Bank, Industrial
Bank of Korea, First Merchant Banking Corporation (collectively as banks) in the sum of U.S.
$11,000,000.00 for the purpose of financing the lease and/or purchase of a Gorizon Satellite from the
International Organization of Space Communications (Intersputnik)
When Domsat failed to pay the loan, GSIS refused to comply with its obligation, reasoning that Domsat
did not use the loan proceeds for the payment of rental for the satellite. GSIS alleged that Domsat, with
Westmont Bank as the conduit, transferred the U.S. $11,000,000.00 loan proceeds from the Industrial
Bank of Korea to Citibank New York account of Westmont Bank and from there to the Binondo
Branch of Westmont Bank. The Banks filed a complaint before the RTC of Makati against Domsat and
GSIS.
In the course of the hearing, GSIS requested for the issuance of a subpoena duces tecum to the custodian
of records of Westmont Bank to produce the following documents:
1. XXX
2. All applications for cashier’s/ manager’s checks and bank transfers funded by the account of
DOMSAT Holdings, Inc. with or through the Westmont Bank (now United Overseas Bank)
for the period January 1997 to December 2002, and all other data and materials covering said
applications, in his/her direct or indirect possession, custody or control (whether actual or
constructive), whether in his/her capacity as Custodian of Records or otherwise;
3. XXX
4. XXX
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The serious objection appears to be that the subpoena is violative of the Law on Secrecy of Bank Deposit,
as amended. The law declares bank deposits to be "absolutely confidential" except: x x x (6) In cases
where the money deposited or invested is the subject matter of the litigation.
On appeal, the Court of Appeals declared that Domsat’s deposit in Westmont Bank is covered by
Republic Act No. 6426 or the Bank Secrecy Law. We quote the pertinent portion of the Decision:
It is our considered opinion that Domsat’s deposit of $11,000,000.00 in Westmont Bank is covered by
the Bank Secrecy Law, as such it cannot be examined, inquired or looked into without the written
consent of its owner. The ruling in Van Twest vs. Court of Appeals was rendered during the effectivity
of CB Circular No. 960, Series of 1983, under Sec. 102 thereof, transfer to foreign currency deposit
account or receipt from another foreign currency deposit account, whether for payment of legitimate
obligation or otherwise, are not eligible for deposit under the System.
The Court of Appeals however upheld the issuance of subpoena praying for the production of
applications for cashier’s or manager’s checks by Domsat through Westmont Bank, as well as a copy of
an Agreement and/or Contract and/or Memorandum between Domsat and/or Philippine Agila
Satellite and Intersputnik for the acquisition and/or lease of a Gorizon Satellite. The appellate court
believed that the production of these documents does not involve the examination of Domsat’s account
since it will never be known how much money was deposited into it or withdrawn therefrom and how
much remains therein.
GSIS insists that Domsat’s deposit with Westmont Bank can be examined and inquired into. It anchored
its argument on Republic Act No. 1405 or the "Law on Secrecy of Bank Deposits," which allows the
disclosure of bank deposits in cases where the money deposited is the subject matter of the litigation.
GSIS asserts that the subject matter of the litigation is the U.S. $11 Million obtained by Domsat from
the Banks to supposedly finance the lease of a Russian satellite from Intersputnik. Whether or not it
should be held liable as a surety for the principal amount of U.S. $11 Million, GSIS contends, is
contingent upon whether Domsat indeed utilized the amount to lease a Russian satellite as agreed in the
Surety Bond Agreement. Hence, GSIS argues that the whereabouts of the U.S. $11 Million is the subject
matter of the case and the disclosure of bank deposits relating to the U.S. $11 Million should be allowed.
ISSUE: Whether GSIS can inquire into the bank account of Domsat Holdings Inc. (NO.)
RULING: Section 8 of Republic Act No. 6426, which was enacted in 1974, and amended by
Presidential Decree No. 1035 and later by Presidential Decree No. 1246, provides:
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Section 8. Secrecy of Foreign Currency Deposits. – All foreign currency deposits authorized under this
Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under
Presidential Decree No. 1034, are hereby declared as and considered of an absolutely confidential nature
and, except upon the written permission of the depositor, in no instance shall foreign currency deposits
be examined, inquired or looked into by any person, government official, bureau or office whether
judicial or administrative or legislative or any other entity whether public or private; Provided, however,
That said foreign currency deposits shall be exempt from attachment, garnishment, or any other order
or process of any court, legislative body, government agency or any administrative body whatsoever. (As
amended by PD No. 1035, and further amended by PD No. 1246, prom. Nov. 21, 1977.)
On the one hand, Republic Act No. 1405 provides for four (4) exceptions when records of deposits may
be disclosed. These are under any of the following instances: a) upon written permission of the
depositor, (b) in cases of impeachment, (c) upon order of a competent court in the case of bribery or
dereliction of duty of public officials or, (d) when the money deposited or invested is the subject matter
of the litigation, and e) in cases of violation of the Anti-Money Laundering Act (AMLA), the Anti-
Money Laundering Council (AMLC) may inquire into a bank account upon order of any competent
court. On the other hand, the lone exception to the non-disclosure of foreign currency deposits, under
Republic Act No. 6426, is disclosure upon the written permission of the depositor.
These two laws both support the confidentiality of bank deposits. There is no conflict between them.
Republic Act No. 1405 was enacted for the purpose of giving encouragement to the people to deposit
their money in banking institutions and to discourage private hoarding so that the same may be properly
utilized by banks in authorized loans to assist in the economic development of the country. It covers all
bank deposits in the Philippines and no distinction was made between domestic and foreign deposits.
Thus, Republic Act No. 1405 is considered a law of general application. On the other hand, Republic
Act No. 6426 was intended to encourage deposits from foreign lenders and investors. It is a special law
designed especially for foreign currency deposits in the Philippines. A general law does not nullify a
specific or special law. Generalia specialibus non derogant. Therefore, it is beyond cavil that Republic
Act No. 6426 applies in this case.
Applying Section 8 of Republic Act No. 6426, absent the written permission from Domsat, Westmont
Bank cannot be legally compelled to disclose the bank deposits of Domsat, otherwise, it might expose
itself to criminal liability under the same act.
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The basis for the application of subpoena is to prove that the loan intended for Domsat by the Banks
and guaranteed by GSIS, was diverted to a purpose other than that stated in the surety bond. The Banks,
however, argue that GSIS is in fact liable to them for the proper applications of the loan proceeds and
not vice-versa. We are however not prepared to rule on the merits of this case lest we pre-empt the
findings of the lower courts on the matter.
22. CHINA BANKING CORP. V. CA

G.R. No. 140687, December 18, 2006.
Ponente: CHICO-NAZARIO, J.
Student Assigned: NEO
DOCTRINE: The owner of the funds unlawfully taken and which are deposited, has the right to inquire
into the said deposits. Clearly it was not the intent of the legislature when it enacted the law on secrecy on
foreign currency deposits to perpetuate injustice. The Court is of the view that the allowance of the inquiry
would be in accord with the rudiments of fair play, the upholding of fairness in our judicial system and
would be an avoidance of delay and time-wasteful and circuitous way of administering justice.
FACTS: The case is a complaint for recovery of sums of money and annulment of sales of real properties
and shares of stock which was filed by the late Jose "Joseph" Gotianuy against his son-in-law, George
Dee, and his daughter, Mary Margaret Dee. Jose Gotianuy accused his daughter, Mary Margaret Dee of
stealing the money in his US dollar deposits with Citibank N.A. amounting to not less than
P35,000,000.00 and US$864,000.00. Mary Margaret Dee received these amounts from Citibank N.A.
through checks which she allegedly deposited at China Banking Corporation. Jose Gotianuy, died
during the pendency of the case before the trial court. He was substituted by his daughter, Elizabeth
Gotianuy Lo. Upon motion of Elizabeth Gotianuy Lo, the trial court issued a subpoena to Cristota
Labios and Isabel Yap, employees of China Bank, to testify on the case but only as to the name or names
is the foreign currency fund deposited with the movant bank.
This was opposed by petitioner China Bank stating the absolute confidentiality under the law under
RA 6426 as amended by P.D. No. 1246. Both the RTC and the CA granted the subpoenas, denying
petitioner China Bank’s motion for reconsideration.
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ISSUE: Whether petitioner is barred from disclosing any information regarding the foreign currency
deposit of the late Jose "Joseph" Gotianuy. (NO.)
RULING: The Court rules against the petitioner and affirms the RTC and CA decision. The Court
reiterated the ruling in Salvacion vs Central Bank where it held that “in fine, the application of the law
depends on the extent of its justice, It would be unthinkable, that the questioned law exempting foreign
currency deposits from attachment, garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever would be used as a device by an
accused for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent.”
There is also no issue as to the source of the funds. Mary Margaret Dee declared the source to be Jose
Gotianuy. There is likewise no dispute that these funds in the form of Citibank US dollar Checks are
now deposited with China Bank. As the owner of the funds unlawfully taken and which are
undisputably now deposited with China Bank, Jose Gotianuy has the right to inquire into the said
deposits. A depositor, in cases of bank deposits, is one who pays money into the bank in the usual course
of business, to be placed to his credit and subject to his check or the beneficiary of the funds held by the
bank as trustee. The Court of Appeals, in allowing the inquiry, considered Jose Gotianuy, a co-depositor
of Mary Margaret Dee. It reasoned that since Jose Gotianuy is the named co-payee of the latter in the
subject checks, which checks were deposited in China Bank, then, Jose Gotianuy is likewise a depositor
thereof.
All things considered and in view of the distinctive circumstances attendant to the present case,
the Court constrained to render a limited pro hac vice ruling. Clearly it was not the intent of the
legislature when it enacted the law on secrecy on foreign currency deposits to perpetuate injustice. The
Court is of the view that the allowance of the inquiry would be in accord with the rudiments of fair play,
the upholding of fairness in our judicial system and would be an avoidance of delay and time-wasteful
and circuitous way of administering justice.
23. INTINGEN V. CA
G.R. No. G.R. No. 128996
Ponente: DE LEON, JR., J.
Student Assigned: OMAR
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DOCTRINE: When the accounts involved are US dollar deposits (or any other foreign currency), RA
6426 of the “Foreign Currency Deposit Act of the Philippines” is applicable and not RA 1405 or the Bank
Secrecy Law. RA 6426 provides only ONE exception to the absolutely confidential nature of bank deposits,
this is: upon written permission of the depositor.
FACTS: Citibank filed a complaint for violation of Sec. 31 in rel. to Sec. 144 of the Corporation Code
against its 2 officers Dante L. Santos and Marilou Genuino when the higher manager of Citibank
assigned its VP Vic Lim to investigate certain anomalous/ highly irregular activities of the Treasurer of
Global Consumer and its Assistant VP, Santos and Genuino respectively. Ms. Marilou Genuino apart
from being an Assistant Vice President in the office of Mr. Dante L. Santos also performed the duties of
an Account Officer. An Account Officer in the office of Mr. Dante L. Santos personally attends to
clients of the bank in the effort to persuade clients to place and keep their monies in the products of
Citibank, N.A., such as peso and dollar deposits, mortgage backed securities and money placements,
among others.
Records show that Santos and Genuino, contrary to their disclosures and the aforementioned policy of
the bank, appeared to be actively engaged in business endeavors that were in conflict with the business
of the bank. It was found out that with the use of 2 companies in which they have personal financial
interest, namely Torrance Development Corp. and Global Pacific Corp., they managed or caused
existing bank clients/ depositors to divert their money from Citibank to products offered by other
companies that were commanding higher rate of yields. This was done by transferring bank clients’
monies to Torrance and Global which in turn placed the monies of the bank clients in securities, shares
of stock and other certificates of third parties. It also appeared that out of these transactions, Santos and
Genuino derived substantial financial gains.
The clients which Santos and Genuino helped/caused to divert their deposits/ money placements with
Citibank was Intengan, Neri and Brawner who have long standing accounts with Citibank in
savings/dollar deposits and/or in trust accounts and/or money placements. Thus, Lim presented bank
records purporting to establish the deception by Santos and Genuino, some of these documents pertain
to the dollar deposits of Intengan, Neri and Brawner (Petitioners). Petitioners then filed their respective
motions for exclusion and physical withdrawal of their bank records that were attached to Lim’s
affidavit on the ground that such disclosure was unwarranted and illegal for violation of RA 1405. RTC
and CA denied the motions.
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CA: The disclosure of petitioners' deposits was necessary to establish the allegation that Santos and
Genuino had violated Section 31 of the Corporation Code in acquiring "any interest adverse to the
corporation in respect of any matter which has been reposed in him in confidence." To substantiate the
alleged scheme of Santos and Genuino, private respondents had to present the records of the monies
which were manipulated by the two officers which included the bank records of herein petitioners. As
long as the bank deposits are material to the case, although not necessarily the direct subject matter
thereof, a disclosure of the same is proper and falls within the scope of the exceptions provided for by
R.A. No. 1405.
ISSUE: Whether or not Citibank may be held responsible for the disclosure of the records of the
accounts. (NO.)
RULING: It is incorrect as the accounts herein were dollar accounts, thus RA 6246 applies.
Consequently, RA 6246 prescribes only one exception to the rule on absolute confidentiality of bank
accounts, and that upon written permission of the depositor. Nonetheless, as the case was improperly
filed as a violation of RA 1405 and the prescriptive period of 8 years (as provided for under Sec. 1 Act
3326) has lapsed, prescription has set in. Thus, petitioners are left with no other alternative remedy.
In the case at bar, a case for violation of Republic Act No . 6426 should have been the proper case
brought against private respondents. Private respondents Lim and Reyes admitted that they had
disclosed details of petitioners' dollar deposits without the latter's written permission. It does not matter
if that such disclosure was necessary to establish Citibank's case against Dante L. Santos and Marilou
Genuino. Lim's act of disclosing details of petitioners' bank records regarding their foreign currency
deposits, with the authority of Reyes, would appear to belong to that species of criminal acts punishable
by special laws, called malum prohibitum.
However, applying Act No. 3326, the offense prescribes in eight years. Private respondent Vic Lim made
the disclosure in September of 1993 in his affidavit submitted before the Provincial Fiscal. The case is
decided in 2002. Thus, per available records, private respondents may no longer be haled before the
courts for violation of Republic Act No. 6426.
Likewise, it cannot be argued that the filing of the complaint or information in the case at bar for alleged
violation of Republic Act No. 1405 had the effect of tolling the prescriptive period, for it is the filing of
the complaint or information corresponding to the correct offense which produces that effect.
24. CHINA BANKING CORP. V. ORTEGA

G.R. NO. L-34964, January 31, 1973.
69
Ponente: MAKALINTAL, J.
Student Assigned: PAVIA
DOCTRINE: The prohibition against examination of or inquiry into a bank deposit under Republic Act
1405 does not preclude its being garnished to insure satisfaction of a judgment. Indeed there is no real
inquiry in such a case, and if the existence of the deposit is disclosed the disclosure is purely incidental to the
execution process. It is hard to conceive that it was ever within the intention of Congress to enable debtors to
evade payment of their just debts, even if ordered by the Court, through the expedient of converting their
assets into cash and depositing the same in a bank.
FACTS: On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against Bautista
Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista for the collection of a
sum of money. Upon motion of the plaintiff the trial court declared the defendants in default for failure
to answer within the reglementary period, and authorized the Branch Clerk of Court and/or Deputy
Clerk to receive the plaintiff's evidence. On January 20, 1970 judgment by default was rendered against
the defendants.
To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit of the defendant B &
B Forest Development Corporation with the China Banking Corporation. Accordingly, a notice of
garnishment was issued by the Deputy Sheriff of the trial court and served on said bank through its
cashier, Tan Kim Liong. In reply, the bank' cashier invited the attention of the Deputy Sheriff to the
provisions of Republic Act No. 1405 which, it was alleged, prohibit the disclosure of any information
relative to bank deposits. Thereupon the plaintiff filed a motion to cite Tan Kim Liong for contempt of
court.
In an order dated March 4, 1972 the trial court denied the plaintiff's motion. However, Tan Kim Liong
was ordered "to inform the Court within five days from receipt of this order whether or not there is a
deposit in the China Banking Corporation of defendant B & B Forest Development Corporation, and
if there is any deposit, to hold the same intact and not allow any withdrawal until further order from
this Court." Tan Kim Liong moved to reconsider but was turned down by order of March 27, 1972. In
the same order he was directed "to comply with the order of this Court dated March 4, 1972 within ten
(10) days from the receipt of copy of this order, otherwise his arrest and confinement will be ordered by
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the Court." Resisting the two orders, the China Banking Corporation and Tan Kim Liong instituted
the instant petition.
ISSUE: Whether a banking institution may validly refuse to comply with a court process garnishing the
bank deposit of a judgment debtor, by invoking the provisions of Republic Act No. 1405. (NO.)
RULING: The pertinent provisions of Republic Act No. 1405 relied upon by the petitioners reads:
Sec. 2. All deposits of whatever nature with banks or banking institutions in the Philippines
including investments in bonds issued by the Government of the Philippines, its political
subdivisions and its instrumentalities, are hereby considered as of absolutely confidential nature
and may not be examined, inquired or looked into by any person, government official, bureau or
office, except upon written permission of the depositor, or in cases of impeachment, or upon order of
a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the
money deposited or invested is the subject matter of the litigation.
Sec 3. It shall be unlawful for any official or employee of a banking institution to disclose to any
person other than those mentioned in Section two hereof any information concerning said deposits.
Sec. 5. Any violation of this law will subject offender upon conviction, to an imprisonment of not
more than five years or a fine of not more than twenty thousand pesos or both, in the discretion of
the court.
The prohibition against examination of or inquiry into a bank deposit under Republic Act 1405 does
not preclude its being garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in
such a case, and if the existence of the deposit is disclosed the disclosure is purely incidental to the
execution process. It is hard to conceive that it was ever within the intention of Congress to enable
debtors to evade payment of their just debts, even if ordered by the Court, through the expedient of
converting their assets into cash and depositing the same in a bank.
Here, the lower court did not order an examination of or inquiry into the deposit of B & B Forest
Development Corporation, as contemplated in the law. It merely required Tan Kim Liong to inform
the court whether or not the defendant B & B Forest Development Corporation had a deposit in the
China Banking Corporation only for purposes of the garnishment issued by it, so that the bank would
hold the same intact and not allow any withdrawal until further order. It will be noted from the
discussion of the conference committee report on Senate Bill No. 351 and House Bill No. 3977, which
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later became Republic Act 1405, that it was not the intention of the lawmakers to place bank deposits
beyond the reach of execution to satisfy a final judgment.
25. MARQUEZ V. DESIERTO

G.R. No. 135882, June 27, 2001.
Ponente: PARDO, J.
Student Assigned: PEPINGCO
DOCTRINE: Before an in camera inspection may be allowed, there must be a pending case before a court
of competent jurisdiction. The account in question must also be clearly identified, and the inspection must
be limited to the subject matter of the pending case before a court of competent jurisdiction. The bank
personnel and account holder must also be notified to be present during inspection, with the inspection only
covering the account identified in the pending case.
FACTS:
1. Lourdes T. Marquez is a branch manager of Union Bank of the Philippines (UBP). Marquez
received an order from the Ombudsman Aniano A. Desierto to produce several bank
documents for inspection in camera1. The documents pertain to accounts involved in a pending
case before the Ombudsman2.
2. The pending case (Fact-Finding and Intelligence Bureau (FFIB) v. Lagdameo) involves 51
manager’s checks purchased by an individual, totalling P272.1M at Traders Royal Bank. 11 of
those manager’s checks, totalling P70.6M, were deposited and credited to an account
maintained in UB.
3. Marquez wrote to the Ombudsman, explaining that the accounts in question cannot be readily
identified, requesting for more time. This is partly due to the fact that the checks were issued in
cash/bearer, and partly to the fact that the accounts to which they were deposited have long
been dormant.
1
Black’s Law Dictionary defines “in camera” as “a judicial action that is taken when court is not in session.”
2
Under the 1987 Constitution, the Ombudsman Act of 1989 (Sec. 15), and pertinent jurisprudence, the Ombudsman has
the power to investigate and require the production and inspection of records and documents.
72
4. Not satisfied with this line of reasoning, as well as the fact that the in camera inspection was
already extended twice, the Ombudsman issued an order directing Marquez to produce the
documents relative to the accounts in issue.
5. This prompted Marquez and UB to file a petition for declaratory relief, prohibition, and
injunction with the RTC Makati against the Ombudsman. The petition was intended to seek a
declaration from the court of her rights, since the provision Ombudsman Act and the Bank
Secrecy Law seem to be in contradiction.
6. The Ombudsman filed a motion to dismiss the petition for declaratory relief on the ground that
the RTC has no jurisdiction to hear a petition for relief from the orders of the Ombudsman, per
Ombudsman Act (Sec. 14 and 27).
7. The RTC denied the Ombudsman’s motion to dismiss (as well as Marquez’ motion for
reconsideration filed at the same time).
8. Back to the case pending with the Ombudsman, FFIB motioned to cite Marquez for contempt.
Marquez filed an opposition to this motion on the ground that the filing was premature due to
the petition pending with the RTC. Marquez reiterates that she simply wanted to clarify how
she should comply with the Ombudsman order without violating the Bank Secrecy Law.
9. The Ombudsman denied Marquez’ opposition to the contempt hearing, and ordered her to
appear before it. Marquez motioned for reconsideration, but this was also denied. Case elevated
to the SC.
ISSUE: Whether the order of the Ombudsman to have an in camera inspection of the questioned
account is allowed as an exception to the law on secrecy of bank deposits (R. A. No. 1405). (NO.)
RULING:
1. The Court explains that before an in camera inspection may be allowed, there must be a
pending case before a court of competent jurisdiction. The account in question must also be
clearly identified, and the inspection must be limited to the subject matter of the pending
case before a court of competent jurisdiction.
2. The bank personnel and account holder must also be notified to be present during inspection,
with the inspection only covering the account identified in the pending case.
3. The Court cites Union Bank of the Philippines v. CA, in which it held that Sec. 2 of the Bank
Secrecy Law declares that bank deposits must be absolutely confidential, except:
a. In an examination made in the course of a special or general examination of a bank
that is specifically authorized by the Monetary Board after being satisfied that there
is reasonable ground to believe that a bank fraud or serious irregularity has been or is
73
being committed and that it is necessary to look into the deposit to establish such fraud
or irregularity,
b. In an examination made by an independent auditor hired by the bank to conduct
its regular audit provided that the examination is for audit purposes only and the
results thereof shall be for the exclusive use of the bank,
c. Upon written permission of the depositor,
d. In cases of impeachment,
e. Upon order of a competent court in cases of bribery or dereliction of duty of public
officials, or
f. In cases where the money deposited or invested is the subject matter of the litigation.
4. The Court further explains that there is no pending litigation yet, before any competent
authority, only the investigation by the Ombudsman. Thus, no reason for the opening of the
bank account for inspection.
5. Lastly, Invasion of privacy is an offense in special laws like the Anti-Wiretapping Law, the
Secrecy of Bank Deposits Act, and the Intellectual Property Code.
26. KAREN E. SALVACION, ET. AL VS. CENTRAL BANK, ET. AL.

G.R. No. 94723. Aug. 21, 1997.
Ponente: TORRES, JR., J.
Student Assigned: QUIAMCO
DOCTRINE: As a general rule, foreign currency deposits cannot be garnished. However, in this case, the
court made an exemption due to the peculiar circumstances surrounding the case wherein a foreign
transient raped a filipino citizen.
FACTS: Greg Bartelli y Northcott, an American tourist, detained and repeatedly raped Karen
Salvacion, a 12-year old the victim, in the apartment of the accused in Makati City. That, on the 4th day
of detention, Karen was finally found by the policemen after a neighbor heard her crying and screaming
for help. The accused was immediately arrested within the premises of the building, and eventually
brought to Makati Municipal Jail.
After thorough investigation and medical examination, the victim, as represented by her parents,
together with the Fiscal filed criminal cases against Greg Bartelli y Northcott for Serious Illegal
74
Detention and for Four (4) counts of Rape. The petitioners also filed a separate civil action for damages
with preliminary attachment against the accused that had several dollar accounts in COCOBANK and
China Banking Corporation. On February 24, 1989, the day there was a hearing for Bartelli’s petition
for bail the latter escaped from jail.
The deputy sheriff served Notice of Garnishment on China Banking Corporation but the latter declined
to furnish a copy as it invoked R.A. No. 1405. The sheriff again sent a letter stating that the garnishment
did not violate the bank secrecy law as it was legally made by virtue of a court order but China Banking
Corporation invoked Section 113 of Central Bank Circular No. 960, that dollar accounts are exempt
from attachment, garnishment, or any other order or process of any court, legislative body, government
agency or any administrative body, whatsoever. The Central Bank sent a reply after a demand from the
court asking if the Section 113 of Central Bank Circular No.960 is absolute in nature of which it replied
in affirmative.
After the accused was declared in default, the court rendered a judgment in favor of the petitioners based
on the heinous acts of the accused and the grave effects on social, moral and psychological aspects on
the part of the petitioners. China Banking Corporation refused the Writ of Execution of the court.
Thus;
Petitioners file a Petition for Relief in the Supreme Court.
ISSUE: Whether the dollar accounts of the accused is absolutely exempt from attachment, garnishment
or any other order or process of any court. (NO.)
RULING: As a general rule, foreign currency deposits cannot be garnished.
However, in this case, the court made an exemption due to the peculiar circumstances surrounding the
case wherein a foreign transient raped a filipino citizen.
If we rule that the questioned Section 113 of Central Bank Circular No. 960 which exempts from
attachment, garnishment, or any other order or process of any court, legislative body, government
agency or any administrative body whatsoever, is applicable to a foreign transient, injustice would result
especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate Article
10 of the New Civil Code which provides that "in case of doubt in the interpretation or application of
laws, it is presumed that the lawmaking body intended right and justice to prevail. "Ninguno non deue
75
enriquecerse tortizeramente con dano de otro." Simply stated, when the statute is silent or ambiguous,
this is one of those fundamental solutions that would respond to the vehement urge of conscience.
It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a
device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of
the innocent
27. RICARDO B. BANGAYAN V. RCBC, ET. AL.

G.R. No. 149193, April 4, 2011
Ponente: SERENO, J.
Student Assigned: RAMIREZ
DOCTRINE: Bank Secrecy Law Sec. 2 provides that all deposits of whatever nature with banks or
banking institutions in the Philippines including investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely
confidential nature and may not be examined, inquired or looked into by any person, government official,
bureau or office, except upon written permission of the depositor, or in cases of impeachment, or upon order
of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money
deposited or invested is the subject matter of the litigation.
FACTS: Ricardo Bangayan had a savings account and a current account with one of the branches of
Rizal Commercial Banking Corp. These two accounts had an “automatic transfer” condition wherein
checks issued by the depositor may be funded by any of the two accounts. Bangayan purportedly signed
a Comprehensive Surety Agreement with RCBC in favor of nine corporations. Under the Surety
Agreement, the funds in Bangayan’s accounts with RCBC would be used as security to guarantee any
existing and future loan obligations, advances, credits and other obligations, including any and all
expenses that these corporations may incur with the respondent bank.
Bangayan contests the veracity and due authenticity of the Surety Agreement on the ground that his
signature thereon was not genuine, and that the agreement was not notarized. RCBC refutes this claim,
although it admitted that it was exceptional for a perfected Surety Agreement of the bank to be without
a signature of the witness and to remain unnotarized. Mr. Lao, the bank's Group Head of Account
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Management, explained that the bank was still in the process of “completing” the Surety Agreement at
that time.
Two of the seven checks that were drawn against petitioner Bangayan’s Current Account were
presented for payment to RCBC were returned by RCBC with the notation "REFER TO DRAWER.
Philip Saria, who was an Account Officer of the bank's Binondo Branch, signed and executed a
Statement before the BOC, with the assistance of Atty. Dolendo of RCBC, on the bank’s letters of
credit issued in favor of the three corporations Bangayan cited this incident as the basis for the allegation
in the Complaint he subsequently filed that RCBC had disclosed to a third party (the BOC)
information concerning the identity, nature, transaction and deposits including details of transaction
related to and pertaining to his deposits with the said bank, in violation of the Bank Secrecy Act. It must
be pointed out that the trial court found that "no evidence was introduced by Bangayan to substantiate
his claim that RCBC gave any classified information" in violation of the Bank Secrecy Law. Five other
checks of Bangayan were presented for payment to RCBC. Five checks were also dishonored by RCBC
on the ground that they had been drawn against insufficient funds and were subsequently returned.
Thus, Bangayan, demanded that RCBC restore all the funds to his account and indemnify him for
damages. Bangayan filed a complaint for damages against RCBC. In its defense, respondent RCBC
claims that Bangayan signed a Surety Agreement in favor of several companies that defaulted in their
payment of customs duties that resulted in the imposition of a lien over the accounts, particularly for
the payment of customs duties assessed by the Bureau of Customs. RCBC further claimed that it had
funded the letter of credit availed of by Lotec Marketing to finance the latter’s importation with the
account of petitioner Bangayan, who agreed to guarantee Lotec Marketing’s obligations under the
Surety Agreement; and, that respondent bank applied petitioner Bangayan’s deposits to satisfy part of
Lotec Marketing’s obligation which resulted in the depletion of the bank account.
RTC Ruling: ruled in favor of RCBC. Court of Appeals affirmed the RTC ruling. The appellate court
found that the dishonor of the checks by RCBC was not without good reason, considering that
petitioner Bangayan’s account had been debited owing to his obligations as a surety in favor of several
corporations. Thus, the Court Appeals found “there was no ‘dishonest purpose,’ or ‘some moral
obliquity,’ or ‘conscious doing of wrong,’ or ‘breach of a known duty,’ or ‘some motive or interest,’ or
‘ill will’ that ‘partakes nature of fraud’ that can be attributed” to RCBC. It likewise ruled that Bangayan
cannot raise the question as to the genuineness, authenticity and due execution of the Surety Agreement
for the first time on appeal.
ISSUE: Whether RCBC violated the Bank Secrecy Act. (NO.)
77
RULING: Bangayan argues that there was a wrongful disclosure by respondents RCBC and Philip
Saria of confidential information regarding his bank accounts in violation of the Bank Secrecy Act.
However, petitioner failed to identify which confidential information respondents divulged before the
BOC that would make them liable under the said law.
Section 2 of the Bank Secrecy Act provides: “All deposits of whatever nature with banks or banking
institutions in the Philippines including investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely
confidential nature and may not be examined, inquired or looked into by any person, government
official, bureau or office, except upon written permission of the depositor, or in cases of impeachment,
or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in
cases where the money deposited or invested is the subject matter of the litigation.”
Bangayan claims that respondent Saria divulged confidential information through the Affidavit he
submitted to the BOC. However, nothing in Saria’s Affidavit before the BOC showed that details of
Bangayan’s bank accounts with RCBC were disclosed. If at all, Saria merely discussed his functions as
an account officer in RCBC and identified the petitioner as the one who had guaranteed the payment
or obligations of the importers under the Surety Agreement. According to Bangayan, the responses of
RCBC’s officers in relation to the BOC’s actions led to unsavory news reports that “disparaged the
petitioner's good character and reputation” and exposed him to “public ridicule and contempt.”
However, as the appellate court correctly found, the humiliation and embarrassment that Bangayan
suffered in the business community was not brought about by the alleged violation of the Bank Secrecy
Act; it was due to the smuggling charges filed by the Bureau of Customs which found their way in the
headlines of newspapers.
Both the trial and appellate courts correctly found that Bangayan did not satisfactorily introduce
evidence “to substantiate his claim that defendant bank gave any classified information” in violation of
the Bank Secrecy Act. Failing to adduce further evidence in the instant Petition with respect to the
bank’s purported disclosure of confidential information as regards his accounts, petitioner cannot be
awarded any damages arising from an unsubstantiated and unproved violation of the Bank Secrecy Act.
In summary, Bangayan failed to establish that the dishonor of the seven checks by respondent RCBC
entitled him to damages, since the dishonor arose from his own voluntary agreement to act as surety for
the four corporations’ letters of credit. There was no bad faith or malice on the part of respondent bank,
as it merely acted within its rights as a creditor under the Surety Agreement.
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28. BSB GROUP, INC. VS. SALLY GO A.K.A. SALLY GO-BANGAYAN
G.R. No. 168644, February 16, 2010.
Ponente: PERALTA, J.
Student Assigned: RENTUTAR
DOCTRINE: What indeed constitutes the subject matter in litigation, the inquiry into bank deposits
allowable under R.A. No. 1405 must be premised on the fact that the money deposited in the account is
itself the subject of the action.
FACTS: Ricardo Bangayan is the president of BSB Group, Inc., a duly organized domestic corporation.
Respondent Sally Go is Bangayan’s wife, who was employed in the company as a cashier.
Bangayan filed a complaint for qualified theft against respondent, alleging that several checks were,
instead of being turned over to the company’s coffers, deposited by respondent to her personal account
maintained at Security Bank. The Information provides specifically that the accused stole and carried
away cash money in the total amount of ₱1,534,135.50.
The prosecution presented in court the testimony of Elenita Marasigan (Marasigan), the representative
of Security Bank. Marasigan testified that respondent, while as cashier, was able to run away with the
checks and credit the amounts to her personal account in Security Bank. Marasigan also identified the
checks.
Respondent filed a Motion to Suppress, seeking the exclusion of Marasigan’s testimony and
accompanying documents thus far received, bearing on the subject Security Bank account invoking the
privilege of confidentiality under R.A. No. 1405.
ISSUE: Whether the testimony of Marasigan and the accompanying documents are violative of the
absolutely confidential nature of bank deposits and, hence, excluded by operation of R.A. No. 1405.
(YES.)
RULING: Petitioner claims that the testimony of Marasigan and the accompanying documents are
exempted from the coverage of the confidentiality rule. Petitioner in the instant case posits that the
account maintained by respondent with Security Bank contains the proceeds of the checks that she has
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fraudulently appropriated to herself and, thus, falls under one of the exceptions in Section 2 of R.A.
No. 1405 – that the money kept in said account is the subject matter in litigation.
What indeed constitutes the subject matter in litigation has already been pointedly and amply addressed
in Union Bank of the Philippines v. Court of Appeals, in which the Court noted that the inquiry into
bank deposits allowable under R.A. No. 1405 must be premised on the fact that the money deposited
in the account is itself the subject of the action.
In the criminal Information filed with the trial court, respondent, unqualifiedly and in plain language,
is charged with qualified theft by abusing petitioner’s trust and confidence and stealing cash in the
amount of ₱1,534,135.50. The said Information makes no factual allegation that in some material way
involves the checks subject of the testimonial and documentary evidence sought to be suppressed.
Neither do the allegations in said Information make mention of the supposed bank account in which
the funds represented by the checks have allegedly been kept.
In other words, it can hardly be inferred from the indictment itself that the Security Bank account is the
ostensible subject of the prosecution’s inquiry. Without needlessly expanding the scope of what is
plainly alleged in the Information, the subject matter of the action in this case is the money amounting
to ₱1,534,135.50 alleged to have been stolen by respondent, and not the money equivalent of the checks
which are sought to be admitted in evidence. Thus, it is that, which the prosecution is bound to prove
with its evidence, and no other.
CASE NO. 29: JOSEPH EJERCITO vs. SANDIGANBAYAN

G.R. Nos. 157294-95, November 30, 2006.
Ponente: CARPIO MORALES, J.
Student Assigned: ROSARIO
DOCTRINE: If the money deposited under an account may be used by banks for authorized loans to
third persons, then such account, regardless of whether it creates a creditor-debtor relationship between the
depositor and the bank, falls under the category of accounts which the law precisely seeks to protect.
FACTS: In lieu of the Criminal Case “People v. Estrada” for plunder, the Special Prosecution Panel
filed before the Sandiganbayan a request for issuance of Subpoena Duces Tecum directing the President
80
of Export and Industry Bank or his/her authorized representative to produce documents namely, Trust
Account and Savings Account belonging to petitioner and statement of accounts of one named “Jose
Velarde” and to testify thereon during the hearings. Sandiganbayan granted both requests and
subpoenas were accordingly issued. Sandiganbayan also granted and issued subpoenas prayed for by the
Prosecution Panel in another later date. Petitioner now assisted by his counsel filed two separate motions
to quash the two subpoenas issued. Sandiganbayan denied both motions and the consequent motions
for reconsideration of petitioner.
ISSUE:
(1) Whether or not the trust accounts of petitioner are covered by the term “deposits” as used in R.A.
No. 1405. (YES.)
(2) Whether or not plunder is neither bribery nor dereliction of duty not exempted from protection of
R.A. No. 1405. (NO.)
(3) Whether or not the unlawful examination of bank accounts shall render the evidence obtained
therefrom inadmissible in evidence. (NO.)
RULING:
(1) An examination of the law shows that the term “deposits” used therein is to be understood
broadly and not limited only to accounts which give rise to a creditor-debtor relationship
between the depositor and the bank.
The policy behind the law is laid down in Section 1. If the money deposited under an account may
be used by banks for authorized loans to third persons, then such account, regardless of
whether it creates a creditor-debtor relationship between the depositor and the bank, falls
under the category of accounts which the law precisely seeks to protect for the purpose of
boosting the economic development of the country.
Trust Account No. 858 is, without doubt, one such account. The Trust Agreement between petitioner
and Urban Bank provides that the trust account covers “deposit, placement or investment of funds” by
Urban Bank for and in behalf of petitioner. The money deposited under Trust Account No. 858,
was, therefore, intended not merely to remain with the bank but to be invested by it elsewhere.
To hold that this type of account is not protected by R.A. 1405 would encourage private hoarding of
funds that could otherwise be invested by banks in other ventures, contrary to the policy behind the
law.
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Section 2 of the same law in fact even more clearly shows that the term “deposits” was intended to
be understood broadly. The phrase “of whatever nature” proscribes any restrictive interpretation of
“deposits.” Moreover, it is clear from the immediately quoted provision that, generally, the law applies
not only to money which is deposited but also to those which are invested. This further shows that the
law was not intended to apply only to “deposits” in the strict sense of the word. Otherwise, there would
have been no need to add the phrase “or invested.”
(2) Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no
reason is seen why these two classes of cases cannot be excepted from the rule making bank deposits
confidential. The policy as to one cannot be different from the policy as to the other. This policy
expresses the notion that a public office is a public trust and any person who enters upon its discharge
does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny.
The crime of bribery and the overt acts constitutive of plunder are crimes committed by public officers,
and in either case the noble idea that “a public office is a public trust and any person who enters upon
its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public
scrutiny” applies with equal force.
Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable in cases of
bribery must also apply to cases of plunder.
(3) Petitioner’s attempt to make the exclusionary rule applicable to the instant case fails. R.A. 1405, it
bears noting, nowhere provides that an unlawful examination of bank accounts shall render the
evidence obtained therefrom inadmissible in evidence. Section 5 of R.A. 1405 only states that “any
violation of this law will subject the offender upon conviction, to an imprisonment of not more than
five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court.”
Even assuming arguendo, however, that the exclusionary rule applies in principle to cases involving R.A.
1405, the Court finds no reason to apply the same in this particular case. Clearly, the “fruit of the
poisonous tree” doctrine presupposes a violation of law. If there was no violation of R.A. 1405
in the instant case, then there would be no “poisonous tree” to begin with, and, thus, no reason
to apply the doctrine.
30. THE REAL BANK (A THRIFT BANK), INC. V. MANINGAS
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G.R. No. 211837, March 16, 2022
Student Assigned: SANTOS
DOCTRINE: The law allows inquiry into bank deposits only when the money deposited or invested is the
subject matter of the litigation.
FACTS: Sometime in 2006, Maningas issued two crossed checks. These checks were made payable to
his friend, Bienvenido Rosaria, in consideration of the land purchase. However, it appears that
Maningas misspelled the name of the person to whom the checks were payable. Instead of “Bienvenido”,
Maningas spelled it as “Bienvinido” as the payee of on both issued checks.
The transaction between Maningas and Rosaria was made in London, and Rosaria asked Maningas to
mail the checks to his sister, Maxima Jumawan, who resides in Parañaque for it to be deposited into
Rosaria’s Metrobank account. Thereafter, when Maningas was asking for the status of the checks and
learned that Rosaria did not receive the amount but it was debited on his Metrobank account.
Investigation was made and discovered that a certain person claimed to be one “Bienvinido Rosaria” had
used the checks to open an account with Real bank situated in Bacoor, Cavite, and thereafter withdrew
the amount of the checks.
Allegations were set that, the one who claims to be Rosaria was introduced by a retired Bank Manager
of the Real Bank Branch to which it presented 3 valid identification cads, which were untampered. And
with this, Maningas filed a complaint, alleging that both banks were negligent in allowing the
unauthorized withdrawal of funds, despite the forged endorsements on the checks. He also contended
that the depository bank, had the duty to pay the checks only upon genuine endorsement and that real
bank, as the collecting bank and last endorser, should bear responsibility for the consequences of the
forgery. To which Maningas sought reimbursement for the amount withdrawn from his account and
saying that the bank should bear responsibility for the consequences of forgery.
The decision of the lower courts held in favor of Maningas, stating that the Real bank was negligent
when the transactions were made by the one who claims to be Bienvinido Rosaria. Since there were no
investigation made as to the matter of the impostor’s action. The lower courts did not apply the fictitious
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payee rule because the intended payee, Rosaria was a real person, and it did not appear to be fictitious
when he was named on the face of the instrument. Hence, the checks remained order instruments which
calls for proper endorsements to be transferred.
ISSUE: Whether Maningas can still recover the] checks in controversy from Real Bank. (YES.)
RULING: The Court affirmed the rulings of the lower courts as to the liability of Real Bank to return
the amount of the checks which were issued by Maningas. Making Real bank held responsible for the
unauthorized payment to an impostor.
The court established that this case involved unauthorized payment to someone other than the intended
payee. Both the Lower courts determined that the checks were for Bienvenido Rosaria. The liability of
the drawee bank arises from its breach of obligation to the depositor, as it paid the check to the wrong
person. The Real bank as the collecting bank, making its liability as the last endorser of the check,
guaranteeing its genuineness and that the prior parties should have the capacity to contract.
The court held that Maningas could still recover the amount from Real bank, as its guarantees had
turned out to be false. Real Bank’s negligence in failing to detect the impostor’s irregularities in the
account contributed to the unauthorized payment. Furthermore, the court also discussed the
application of the fictitious payee rule which cannot be availed in this case because Maningas had
intended for the actual Rosaria to be the payee, despite the misspelling. Therefore, the checks remained
order instruments
As with regard to secrecy of bank deposits, the Court noted that the RTC erred in ordering the
production of the impostor’s bank records because the money deposited was not the subject matter of
litigation. The law allows inquiry into bank deposits only when the money deposited or invested is the
subject matter of the litigation.
Therefore, Maningas is entitled for the recovery of the checks.
31: REPUBLIC V. EUGENEIO, JR.

G.R. No. 174269, May 8, 2009.
Ponente: TINGA, J.
Student Assigned: STA. ANA
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Topic under the Syllabus: AMLA
DOCTRINE: The Court’s construction of Section 11 of the AMLA is undoubtedly influenced by right to
privacy considerations. If sustained, petitioner’s argument that a bank account may be inspected by the
government following an ex parte proceeding about which the depositor would know nothing would have
significant implications on the right to privacy, a right innately cherished by all notwithstanding the
legally recognized exceptions thereto. The notion that the government could be so empowered is cause for
concern of any individual who values the right to privacy which, after all, embodies even the right to be "let
alone," the most comprehensive of rights and the right most valued by civilized people.
FACTS: A series of investigations concerning the award of the NAIA 3 contracts to PIATCO were
undertaken by the Ombudsman and the Compliance and Investigation Staff of petitioner Anti-Money
Laundering Council. The Office of the Solicitor General wrote the AMLC requesting the latter’s
assistance “in obtaining more evidence to completely reveal the financial trail of corruption surrounding
the NAIA 3 Project.” The AMLC issued Resolution No. 75, whereby the Council resolved to authorize
the Executive Director of the AMLC “to sign and verify an application to inquire into and/or examine
the deposits or investments of Pantaleon Alvarez, Wilfredo Trinidad, Alfredo Liongson, and Cheng
Yong, and their related web of accounts wherever these may be found, x x x;” and to authorize the
AMLC Secretariat “to conduct an inquiry into subject accounts once the Regional Trial Court grants
the application to inquire into and/or examine the bank accounts” of those four individuals.
Under the authority granted by the Resolution, the AMLC filed an application to inquire into or
examine the deposits or investments of Alvarez, Trinidad, Liongson and Cheng Yong before the RTC
of Makati. The Makati RTC rendered an Order granting the AMLC the authority to inquire and
examine the subject accounts of Alvarez, Trinidad, Liongson and Cheng Yong.
The Republic, through the AMLC filed an application before the Manila RTC to inquire into and or
examine thirteen accounts and two related web of accounts all having been used to facilitate corruption
in the NAIA 3 Project. The Manila RTC issued an Order granting the Ex-Parte Application.
ISSUE: Whether an application for authorization of an inquiry order ex-parte is valid. (NO.)
RULING: The Court is unconvinced by this proposition, and agree instead with the then Solicitor
General who conceded that the use of the phrase "in cases of" was unfortunate, yet submitted that it
should be interpreted to mean "in the event there are violations" of the AMLA, and not that there are
already cases pending in court concerning such violations. If the contrary position is adopted, then the
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bank inquiry order would be limited in purpose as a tool in aid of litigation of live cases, and wholly
inutile as a means for the government to ascertain whether there is sufficient evidence to sustain an
intended prosecution of the account holder for violation of the AMLA. Should that be the situation, in
all likelihood the AMLC would be virtually deprived of its character as a discovery tool, and thus would
become less circumspect in filing complaints against suspect account holders.
Still, even if the bank inquiry order may be availed of without need of a pre-existing case under the
AMLA, it does not follow that such order may be availed of ex parte. There are several reasons why the
AMLA does not generally sanction ex parte applications and issuances of the bank inquiry order. Of
course, Section 11 also allows the AMLC to inquire into bank accounts without having to obtain a
judicial order in cases where there is probable cause that the deposits or investments are related to
kidnapping for ransom, certain violations of the Comprehensive Dangerous Drugs Act of 2002,
hijacking and other violations under R.A. No. 6235, destructive arson and murder. Since such special
circumstances do not apply in this case, there is no need for us to pass comment on this proviso.
Although oriented towards different purposes, the freeze order under Section 10 and the bank inquiry
order under Section 11 are similar in that they are extraordinary provisional reliefs which the AMLC
may avail of to effectively combat and prosecute money laundering offenses. Crucially, Section 10 uses
specific language to authorize an ex parte application for the provisional relief therein, a circumstance
absent in Section 11. If indeed the legislature had intended to authorize ex parte proceedings for the
issuance of the bank inquiry order, then it could have easily expressed such intent in the law, as it did
with the freeze order under Section 10.
The Court could divine the sense in allowing ex parte proceedings under Section 10 and in proscribing
the same under Section 11. A freeze order under Section 10 on the one hand is aimed at preserving
monetary instruments or property in any way deemed related to unlawful activities as defined in Section
3(i) of the AMLA. The owner of such monetary instruments or property would thus be inhibited from
utilizing the same for the duration of the freeze order. To make such a freeze order anteceded by a judicial
proceeding with notice to the account holder would allow for or lead to the dissipation of such funds
even before the order could be issued.
On the other hand, a bank inquiry order under Section 11 does not necessitate any form of physical
seizure of property of the account holder. What the bank inquiry order authorizes is the examination of
the particular deposits or investments in banking institutions or non-bank financial institutions. The
monetary instruments or property deposited with such banks or financial institutions are not seized in
a physical sense, but are examined on particular details such as the account holder’s record of deposits
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and transactions. Unlike the assets subject of the freeze order, the records to be inspected under a bank
inquiry order cannot be physically seized or hidden by the account holder.
The Court’s construction of Section 11 of the AMLA is undoubtedly influenced by right to privacy
considerations. If sustained, petitioner’s argument that a bank account may be inspected by the
government following an ex parte proceeding about which the depositor would know nothing would
have significant implications on the right to privacy, a right innately cherished by all notwithstanding
the legally recognized exceptions thereto. The notion that the government could be so empowered is
cause for concern of any individual who values the right to privacy which, after all, embodies even the
right to be "let alone," the most comprehensive of rights and the right most valued by civilized people.
32. REPUBLIC V. GLASGOW CREDIT AND COLLECTION SERVICES, INC.

G.R. No. 170281, January 18, 2008.
Ponente: CORONA, J.
DOCTRINE: A petition for civil forfeiture shall be filed in any regional trial court of the judicial region
where the monetary instrument, property or proceeds representing, involving, or relating to an unlawful
activity or to a money laundering offense are located.
A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture
proceeding. Stated otherwise, a finding of guilt for an unlawful activity is not an essential element of civil
forfeiture.
FACTS: In 2003, the Republic filed a complaint in the RTC Manila for civil forfeiture of assets against
bank deposits maintained by GASLOW in Citystate Savings Bank, Inc. (CBSI). In 2005, Gaslow filed a
Motion to Dismiss, it alleged that the complaint no cause of action as there was still no conviction for
estafa or other criminal violations implicating Glasgow, and that the complaint was filed in the improper
venue. The Republic opposed Glasgow’s motion to dismiss, contending that prior conviction for
unlawful activity was not a precondition to the filing of a civil forfeiture case and that its complaint
alleged ultimate facts sufficient to establish a cause of action. It denied that it failed to prosecute the case.
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ISSUE: Whether the complaint for civil forfeiture was filed in an improper venue. (NO.)
RULING: The Rule of Procedure in Cases of Civil Forfeiture the Rule of Procedure in Cases of Civil
Forfeiture provides that: “A petition for civil forfeiture shall be filed in any regional trial court of the
judicial region where the monetary instrument, property or proceeds representing, involving, or relating
to an unlawful activity or to a money laundering offense are located;” Pasig City, where the account
sought to be forfeited in this case is situated, is within the National Capital Judicial Region (NCJR).
Clearly, the complaint for civil forfeiture of the account may be filed in any RTC of the NCJR. Since
the RTC Manila is one of the RTCs of the NCJR, it was a proper venue of the Republic’s complaint
for civil forfeiture of Glasgow’s account.
ISSUE: Whether the conviction for an unlawful activity is a prerequisite for the institution of a civil
forfeiture proceeding. (NO.)
RULING: RA 9160, as amended, and its implementing rules and regulations lay down two conditions
when applying for civil forfeiture: (1) when there is a suspicious transaction report or a covered
transaction report deemed suspicious after investigation by the AMLC, and: (2) the court has, in a
petition filed for the purpose, ordered the seizure of any monetary instrument or property, in whole or
in part, directly or indirectly, related to said report.
Whether or not there is truth in the allegation the bank account contains the proceeds of unlawful
activities is an evidentiary matter that may be proven during trial. The complaint, however, did not even
have to show or allege that Glasgow had been implicated in a conviction for, or the commission of, the
unlawful activities of estafa and violation of the Securities Regulation Code.
A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture
proceeding. Stated otherwise, a finding of guilt for an unlawful activity is not an essential element of
civil forfeiture. Section 27 of the Rule of Procedure in Cases of Civil Forfeiture provides: Sec. 27. No
prior charge, pendency or conviction necessary. – No prior criminal charge, pendency of or conviction
for an unlawful activity or money laundering offense is necessary for the commencement or the
resolution of a petition for civil forfeiture.
Since the account of Glasgow in CSBI was (1) covered by several suspicious transaction reports and (2)
placed under the control of the trial court upon the issuance of the writ of preliminary injunction, the
conditions provided in Section 12(a) of RA 9160, as amended, were satisfied. Hence, the Republic,
represented by the AMLC, properly instituted the complaint for civil forfeiture. Thus, regardless of the
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absence, pendency or outcome of a criminal prosecution for the unlawful activity or for money
laundering, an action for civil forfeiture may be separately and independently prosecuted and resolved.
33. REPUBLIC VS. CABRINI GREEN ROSS, INC.

G.R. No. 154522, May 5, 2006.
Ponente: CORONA, J.
Student Assigned: VALENZUELA
DOCTRINE: The amendment by RA 9194 of RA 9160 erased any doubt on the jurisdiction of the CA
over the extension of freeze orders. As the law now stands, it is solely the CA which has the authority to issue
a freeze order as well as to extend its effectivity. It also has the exclusive jurisdiction to extend existing freeze
orders previously issued by the AMLC vis-à-vis accounts and deposits related to money-laundering
activities.
FACTS: In the exercise of its power under Section 10 of RA 9160, the Anti-Money Laundering
Council (AMLC) issued freeze orders against various bank accounts of respondents. The frozen bank
accounts were previously found prima facie to be related to the unlawful activities of respondents.
Under RA 9160, a freeze order issued by the AMLC is effective for a period not exceeding 15 days unless
extended "upon order of the court." Accordingly, before the lapse of the period of effectivity of its freeze
orders, the AMLC filed with the Court of Appeals (CA) various petitions for extension of effectivity of
its freeze orders.
The AMLC invoked the jurisdiction of the CA in the belief that the power given to the CA to issue a
temporary restraining order (TRO) or writ of injunction against any freeze order issued by the AMLC
carried with it the power to extend the effectivity of a freeze order. In other words, the AMLC
interpreted the phrase "upon order of the court" to refer to the CA.
However, the CA disagreed with the AMLC and dismissed the petitions. It uniformly ruled that
it was not vested by RA 9160 with the power to extend a freeze order issued by the AMLC.
ISSUE: Whether the CA has jurisdiction to extend the effectivity of a freeze order. (YES.)
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RULING: During the pendency of these petitions, or on March 3, 2003, Congress enacted RA 9194
(An Act Amending Republic Act No. 9160, Otherwise Known as the "Anti-Money Laundering Act of
2001"). It amended Section 10 of RA 9160 as follows:
SEC. 7. Section 10 of [RA 9160] is hereby amended to read as follows:

SEC. 10. Freezing of Monetary Instrument or Property. - The Court of Appeals, upon
application ex parte by the AMLC and after determination that probable cause exists
that any monetary instrument or property is in any way related to an unlawful activity
as defined in Sec. 3(i) hereof, may issue a freeze order which shall be effective
immediately. The freeze order shall be for a period of twenty (20) days unless extended
by the court.
Section 12 of RA 9194 further provides:
SEC 12. Transitory Provision. - Existing freeze orders issued by the AMLC shall remain
in force for a period of thirty (30) days after the effectivity of this Act, unless extended
by the Court of Appeals.
The amendment by RA 9194 of RA 9160 erased any doubt on the jurisdiction of the CA over the extension
of freeze orders. As the law now stands, it is solely the CA which has the authority to issue a freeze
order as well as to extend its effectivity. It also has the exclusive jurisdiction to extend existing freeze
orders previously issued by the AMLC vis-à-vis accounts and deposits related to money-laundering
activities.
The CA issued a resolution granting the petition for extension of freeze orders. Hence, the SC dismissed
the case for being moot and remanded the other remaining actions.
34. SUBIDO V. COURT OF APPEALS

G.R. No. 216914, December 06, 2016.
Ponente: PEREZ, J.
Student Assigned: VELASCO
DOCTRINE: Section 11 of the AMLA providing for ex-parte application and inquiry by the AMLC
into certain bank deposits and investments does not violate substantive due process, there being no physical
seizure of property involved at that stage. The monetary instruments or property deposited with such banks
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or financial institutions are not seized in a physical sense, but are examined on particular details such as
the account holder's record of deposits and transactions.
The sole investigative functions of the AMLC find more resonance with the investigative functions of the
NBI. In Shu vs. Dee, the Court ruled that the functions of NBI are merely investigatory and informational
in nature. Since the NBI's findings were merely recommendatory, the SC found that no denial of the
respondent's due process right could have taken place; the NBI's findings were still subject to the prosecutor's
and the Secretary of Justice's actions for purposes of finding the existence of probable cause.
FACTS: In connection with the investigation regarding the disproportionate wealth of VP Binay and
his family, various news reports announced the inquiry into VP Binay’s bank accounts, including
accounts of members of his family. SPCMB was most concerned with the article published in the Manila
Times on entitled "Inspect Binay Bank Accounts" which provides that the AMLC asked the CA to allow
to peek into the bank accounts of Binay, their corporation and SPCMB, the law firm which Abigail
Binay was a former partner. SPCMB then wrote to CA Justice Reyes inquiring the veracity of the report.
Within 24 hrs, Justice Reyes replied saying that petition is strictly confidential and cannot disclose
anything about it.
Subsequently, Manila Times published another article entitled, "CA orders probe of Binay's assets"
reporting that the appellate court had issued a Resolution granting the ex-parte application of the
AMLC to examine the bank accounts of SPCMB. Believing that it had no other remedy, SPCMB filed
this present case questioning the constitutionality of Section 11 of AMLA. It alleged that the ex-parte
proceedings authorizing the inquiry of the AMLC into certain bank deposits and investments is
unconstitutional due to the violation of its rights to due process and privacy.
ISSUE:
1. Whether Section 11 is violative of SPCMB right to due process. (NO.)
2. Whether Section 11 is violative of SPCMB right to privacy. (NO.)
RULING:
1. The right to due process has two aspects: (1) substantive which deals with the extrinsic and intrinsic
validity of the law; and (2) procedural which delves into the rules the government must follow before it
deprives a person of its life, liberty or property. Section 11 of the AMLA providing for ex-parte
application and inquiry by the AMLC into certain bank deposits and investments does not violate
substantive due process, there being no physical seizure of property involved at that stage. It is the
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preliminary and actual seizure of the bank deposits or investments in question that brings these within
reach of the judicial process, specifically a determination that the seizure violated due process.
What the bank inquiry order authorizes is the examination of particular deposits or investments in
banking institutions or non-bank financial institutions. The monetary instruments or property
deposited with such banks or financial institutions are not seized in a physical sense, but are examined
on particular details such as the account holder's record of deposits and transactions.
Concerning the procedural due process, the SC emphasized that AMLC only exercised investigative
powers and not quasi-judicial powers. The enabling law itself, the AMLA, specifies the jurisdiction of
the trial courts, RTC and Sandiganbayan, over money laundering cases, and delineates the investigative
powers of the AMLC. The sole investigative functions of the AMLC finds more resonance with the
investigative functions of the NBI. In Shu vs. Dee, the Court ruled that the functions of NBI are merely
investigatory and informational in nature. Since the NBI's findings were merely recommendatory, the
SC find that no denial of the respondent's due process right could have taken place; the NBI's findings
were still subject to the prosecutor's and the Secretary of Justice's actions for purposes of finding the
existence of probable cause. Thus, SPCMB is not entitle to any notice of such proceedings.
2. Unlike in the US, wherein the US Supreme Court ruled that there was no legitimate expectancy of
privacy as to the bank records of a depositor, in the Philippines, although our Constitution did not
allocate specific rights peculiar to bank deposits, it is quite clear that such privacy is respected pursuant
to Bank Secrecy Act. The general rule of absolute confidentiality is simply statutory i.e., not specified in
the Constitution, which has been affirmed in jurisprudence. The exceptions to the general rule of
absolute confidentiality have also been carved out by the Legislature which legislation have been
sustained, albeit subjected to heightened scrutiny by the courts; and such legislated exception is Section
11 of the AMLA.
Moreover, although the government can indeed into the privacy of the bank account owners, Section
11 have sufficient safeguards like: AMLC is required to establish probable cause, the CA should also
establish probable cause, bank inquiry for related account should be preceded by bank inquiry for the
principal account and that it should comply with Art 3, Section 2 and 3 of the Constitution.
35. LIGOT V. REPUBLIC

G.R. No. G.R. No. 176944, March 6, 2013.
Ponente: BRION, J.
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Student Assigned: ALARIAO
DOCTRINE: The effectivity of a freeze order may be extended by the CA for a period not exceeding six
months. Before or upon the lapse of this period, ideally, the Republic should have already filed a case for
civil forfeiture against the property owner with the proper courts and accordingly secure an asset
preservation order or it should have filed the necessary information. Otherwise, the property owner should
already be able to fully enjoy his property without any legal process affecting it.
FACTS: Lt. Gen. Ligot declared in his Statement of Assets, Liabilities, and Net Worth (SALN) that as
of December 31, 2003, he had assets in the total amount of Three Million Eight Hundred Forty-Eight
Thousand and Three Pesos (₱3,848,003.00). In contrast, his declared assets in his 1982 SALN
amounted to only One Hundred Five Thousand Pesos (₱105,000.00). The Ombudsman’s investigation
revealed that Lt. Gen. Ligot and his family had other properties and bank accounts, not declared in his
SALN, amounting to at least Fifty Four Million One Thousand Two Hundred Seventeen Pesos
(₱54,001,217.00).
Bearing in mind that Lt. Gen. Ligot’s main source of income was his salary as an officer of the AFP, and
given his wife and children’s lack of any other substantial sources of income, the Ombudsman declared
the assets registered in Lt. Gen. Ligot’s name, as well as those in his wife’s and children’s names, to be
illegally obtained and unexplained wealth. The Ombudsman’s investigation also looked into Mrs.
Ligot’s younger brother, Edgardo Tecson Yambao. Despite Yambao’s lack of substantial income, the
records show that he has real properties and vehicles registered in his name, amounting to Eight Million
Seven Hundred Sixty Three Thousand Five Hundred Fifty Pesos (₱8,763,550.00), which he acquired
from 1993 onwards. The Ombudsman concluded that Yambao acted as a dummy and/or nominee of
the Ligot spouses, and all the properties registered in Yambao’s name actually belong to the Ligot family.
Compliance and Investigation staff (CIS) of the AMLC conducted a financial investigation, which
revealed the existence of the Ligots’ various bank accounts with several financial institutions. On May
25, 2005, the AMLC issued Resolution No. 52, Series of 2005, directing the Executive Director of the
AMLC Secretariat to file an application for a freeze order against the properties of Lt. Gen. Ligot and
the members of his family with the CA.The appellate court granted the application in its July 5, 2005
resolution, ruling that probable cause existed that an unlawful activity and/or money laundering offense
had been committed by Lt. Gen. Ligot and his family, including Yambao, and that the properties sought
to be frozen are related to the unlawful activity or money laundering offense. Accordingly, the CA
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issued a freeze order against the Ligots’ and Yambao’s various bank accounts, web accounts and vehicles,
valid for a period of 20 days from the date of issuance.
On July 26, 2005, the Republic filed an Urgent Motion for Extension of Effectivity of Freeze Order.
The CA granted the motion in its September 20, 2005 resolution, extending the freeze order until after
all the appropriate proceedings and/or investigations have been terminated.
In November 15, 2005, the "Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation, and
Freezing of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an
Unlawful Activity or Money Laundering Offense under Republic Act No. 9160, as Amended" (Rule
in Civil Forfeiture Cases) took effect. Under this rule, a freeze order could be extended for a maximum
period of six months.
Lt. Gen. Ligot argues that the appellate court committed grave abuse of discretion amounting to lack or
excess of jurisdiction when it extended the freeze order issued against him and his family even though
no predicate crime had been duly proven or established to support the allegation of money laundering.
He also maintains that the freeze order issued against them ceased to be effective in view of the 6-month
extension limit of freeze orders provided under the Rule in Civil Forfeiture Cases.
ISSUE:
1. Whether the CA erred in extending the effectivity period of the freeze order against Ligot, given that
they have not yet been convicted of committing any of the offenses enumerated under RA No. 9160
that would support the AMLC’s accusation of money-laundering activity. (NO.)
2. Whether the CA erred in extending the effectivity period of the freeze order against Ligot for six years.
(YES.)
RULING:
1. Contrary to the Ligots’ claim, a freeze order is not dependent on a separate criminal charge, much less
does it depend on a conviction.
The legal basis for the issuance of a freeze order is Section 10 of RA No. 9160, as amended by RA No.
9194, states:
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Section 10. Freezing of Monetary Instrument or Property. – The Court of Appeals, upon application
ex parte by the AMLC and after determination that probable cause exists that any monetary instrument
or property is in any way related to an unlawful activity as defined in Section 3(i) hereof, may issue a
freeze order which shall be effective immediately. The freeze order shall be for a period of twenty (20)
days unless extended by the court.
Based on Section 10 quoted above, there are only two requisites for the issuance of a freeze order: (1) the
application ex parte by the AMLC and (2) the determination of probable cause by the CA. The probable
cause required for the issuance of a freeze order differs from the probable cause required for the
institution of a criminal action, and the latter was not an issue before the CA nor is it an issue before us
in this case. As defined in the law, the probable cause required for the issuance of a freeze order refers to
"such facts and circumstances which would lead a reasonably discreet, prudent or cautious man to
believe that an unlawful activity and/or a money laundering offense is about to be, is being or has been
committed and that the account or any monetary instrument or property subject thereof sought to be
frozen is in any way related to said unlawful activity and/or money laundering offense."
In other words, in resolving the issue of whether probable cause exists, the CA’s statutorily-guided
determination’s focus is not on the probable commission of an unlawful activity (or money laundering)
that the Office of the Ombudsman has already determined to exist, but on whether the bank accounts,
assets, or other monetary instruments sought to be frozen are in any way related to any of the illegal
activities enumerated under RA No. 9160, as amended. Otherwise stated, probable cause refers to the
sufficiency of the relation between an unlawful activity and the property or monetary instrument which
is the focal point of Section 10 of RA No. 9160, as amended.
The Rule in Civil Forfeiture Cases expressly provides –
SEC. 28. Precedence of proceedings. - Any criminal case relating to an unlawful activity shall be given
precedence over the prosecution of any offense or violation under Republic Act No. 9160, as amended,
without prejudice to the filing of a separate petition for civil forfeiture or the issuance of an asset
preservation order or a freeze order. Such civil action shall proceed independently of the criminal
prosecution. [italics supplied; emphases ours]
Section 10 of RA No. 9160 (allowing the extension of the freeze order) and Section 28 (allowing a
separate petition for the issuance of a freeze order to proceed independently) of the Rule in Civil
Forfeiture Cases are only consistent with the very purpose of the freeze order, which specifically is to
give the government the necessary time to prepare its case and to file the appropriate charges without
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having to worry about the possible dissipation of the assets that are in any way related to the suspected
illegal activity.
2. A freeze order, however, cannot be issued for an indefinite period. A freeze order is an extraordinary
and interim relief issued by the CA to prevent the dissipation, removal, or disposal of properties that are
suspected to be the proceeds of, or related to, unlawful activities as defined in Section 3(i) of RA No.
9160, as amended. The primary objective of a freeze order is to temporarily preserve monetary
instruments or property that are in any way related to an unlawful activity or money laundering, by
preventing the owner from utilizing them during the duration of the freeze order. The relief is pre-
emptive in character, meant to prevent the owner from disposing his property and thwarting the State’s
effort in building its case and eventually filing civil forfeiture proceedings and/or prosecuting the owner.
Our examination of the Anti-Money Laundering Act of 2001, as amended, from the point of view of
the freeze order that it authorizes, shows that the law is silent on the maximum period of time that the
freeze order can be extended by the CA. The final sentence of Section 10 of the Anti-Money Laundering
Act of 2001 provides, "the freeze order shall be for a period of twenty (20) days unless extended by the
court." In contrast, Section 55 of the Rule in Civil Forfeiture Cases qualifies the grant of extension "for
a period not exceeding six months" "for good cause" shown.
We observe on this point that nothing in the law grants the owner of the "frozen" property any
substantive right to demand that the freeze order be lifted, except by implication, i.e., if he can show that
no probable cause exists or if the 20-day period has already lapsed without any extension being requested
from and granted by the CA. Notably, the Senate deliberations on RA No. 9160 even suggest the intent
on the part of our legislators to make the freeze order effective until the termination of the case, when
necessary.
The silence of the law, however, does not in any way affect the Court’s own power under the
Constitution to "promulgate rules concerning the protection and enforcement of constitutional rights
xxx and procedure in all courts." Pursuant to this power, the Court issued A.M. No. 05-11-04-SC,
limiting the effectivity of an extended freeze order to six months – to otherwise leave the grant of the
extension to the sole discretion of the CA, which may extend a freeze order indefinitely or to an
unreasonable amount of time – carries serious implications on an individual’s substantive right to due
process.
Thus, as a rule, the effectivity of a freeze order may be extended by the CA for a period not exceeding
six months. Before or upon the lapse of this period, ideally, the Republic should have already filed a case
96
for civil forfeiture against the property owner with the proper courts and accordingly secure an asset
preservation order or it should have filed the necessary information. Otherwise, the property owner
should already be able to fully enjoy his property without any legal process affecting it. However, should
it become completely necessary for the Republic to further extend the duration of the freeze order, it
should file the necessary motion before the expiration of the six-month period and explain the reason or
reasons for its failure to file an appropriate case and justify the period of extension sought. The freeze
order should remain effective prior to the resolution by the CA, which is hereby directed to resolve this
kind of motion for extension with reasonable dispatch.
36. REPUBLIC OF THE PHILIPPINES V. FIRST PACIFIC NETWORK INC.

G.R. No. 156646
DOCTRINE: History of the amended sec.10 of RA 9160.

Section 10 of Republic Act No. 9160, which: the AMLC may issue a freeze order, which shall be effective
immediately, on the account for a period not exceeding fifteen (15) days the AMLC may be extended upon
order of the court, provided that the fifteen (15)-day period shall be tolled pending the court's decision to
extend the period. On March 5, 2003 Congress enacted Republic Act No. 9194 amended sec.10 of RA 9160
into” the Court of Appeals may issue a freeze order which shall be effective immediately. The freeze order
shall be for a period of twenty (20) days unless extended by the court”.
Meanwhile, on November 15, 2005, The Supreme court promulgated Rule of Procedure in Cases of Civil
Forfeiture Section 53(b) of this rule, a freeze order could be extended for a maximum period of six months.
Congress further amended Section 10 of the Anti-Money Laundering Act of 2001 with Republic Act No.
10167 which was made into law on June 6, 2012 as follow “Court of Appeals may issue a freeze order,
which shall be effective immediately. The freeze order shall be for a period of twenty (20) days from filing
of the petition.unless extended by the court”.
Republic Act No. 10365, which was enacted on February 15, 2013, further amended Section 10 of
Republic Act No. 9160 by mandating that the Court of Appeals may issue a freeze order the duration of
which shall not exceed six months otherwise it would be considered lifted.
97
FACTS: AMLC received a report from Reynaldo Geronimo that the respondent FPN engaged in an
Illegal securities trading and the proceeds thereof were deposited in Standard Charted Bank in ayala
Makati. Subsequently, a searched warrant issued by the RTC and the NBI forthwith able to seize several
documents, client files, documents showing the share transactions of client and that First Pacific was
not registered with the SEC to engage in the buying and selling of securities. The AMLC directing the
immediate issuance and service of the freeze order upon First Pacific's account.
Before the lapse of the freeze order, AMLC requested the Court of Appeals to extend the effectivity of
the freeze order against respondent First Pacific Network, Inc.'s (FPN) bank account with the main
branch of Standard Chartered Bank. On September 5, 2002 the Court of Appeals gave the AMLC an
extension of not more than 30 days. Dissatified after petitioner’s motion for partial reconsideration
denied by CA filed a petition for review of CA decision for extension of free order.
ISSUE: Whether the freeze order issued against respondent's bank account should be further extended
beyond the thirty (30)-day period. (YES.)
RULING: The SC finds no error in the decision of the Court of Appeals to extend Freeze Order.
In Ligot v. Republic, A freeze order is an extraordinary and interim relief issued by the CA to prevent the
dissipation, removal, or disposal of properties that are suspected to be the proceeds of, or related to,
unlawful activities as defined in Section 3(i) of RA No. 9160, as amended. The primary objective of a
freeze order is to temporarily preserve monetary instruments or property that are in any way related to
an unlawful activity or money laundering, by preventing the owner from utilizing them during the
duration of the freeze order. The relief is pre-emptive in character, meant to prevent the owner from
disposing his property.
In the case at bar, The state of law and jurisprudence at the time of the issuance of the assailed ruling of
the Court of Appeals gave the appellate court discretion to extend a freeze order only for a reasonable
period of time which was later clarified by Rule in Civil Forfeiture Cases [Sec.53 (b)] as not exceeding
more than six ( 6) months.
37. AMLC v. BLOOMBERRY RESORTS AND HOTELS, INC. (SOLAIRE) AND BANCO
DE ORO
G.R. No. 224112, September 02, 2020
Ponente: CARANDANG, J.
98
Student Assigned: ALIPIO
DOCTRINE: A freeze Order may not be issued indefinitely, lest the same be characterized as a violation
of the person’s right to due process and to be presumed innocent of a charge.
FACTS: Bangladesh Bank Governor sought assistance from BSP Governor Tetangco regarding the loss
of millions of US Dollars from Bangladesh Bank's Account with the New York Fed.
According to Governor Rahman, some fraudulent payment transactions were made to the New York
Fed in favour of RCBC involving $81,000,000.00.
Governor Rahman requested Gov. Tetangco to conduct an immediate inquiry into the matter and
asked hekp for the recovery of money.
Based on the incident report of the Bangladesh Bank the beneficiaries of the fraudulent transfer with
the RCBC are: Michael Cruz ($6,000,000,039.12), Jessie Lagrosas ($30,000,039.12), Alfred Vergara
($20,000,000.00), and Enrico T. Vasquez (25,001,583.88) amounting to $81,001,662.12.
The joint director of the BFIU visited the AMLC Secretariat and presented the facts of their case and
sought for assistance. On investigation it was learned that the events transpired leading to a transfer to a
BDO Account of BRHI.
An unauthorized user issued SWIFT payment transactions to the NY Fed which the NY Fed did not
execute the payment for lack of beneficiary details.
On the chinese new year, Bangladesh sent stop payment requests to RCBC. However, RCBC was able
to respond only the day after the holiday and placed on hold the remaining proceeds.
The remittances to the four account holders of RCBC were either transferred or withdrawn on the same
day or on the next working day.
99
Because of the huge amount of money transferred to the accounts of Cruz, Lagrosas, Vergara and
Vasquez originating from the same payment instructions, the AMLC conducted initial investigations
including the amount of a certain William Go and Kam Wong.
It was found that the withdrawals from these four accounts were eventually transferred to Go's account.
This was credited to PhilRem, a remittance company upon Go's instructions. In other words the money
was transferred to RCBC, to Go and eventually to Phil Rem.
PhilRem was informed that Go intended to take advantage of the influx of Chinese casino players for
CNY. PhilRem delivered the money to BRHI, Eastern Hawaii Leisure Company and to Weikang Xu.
Upon finding probable cause AMLC, issue a resolution authorizing the OSG for the issuance of a freeze
order against the subject account.
The CA issued the freeze order effective for 30 days. It held that there was ample basis that the account
of BRHI with BDO to be involved in unlawful activities and offense against RA9160. But since BRHI
is a legitimate business the CA limited it's freeze order to 30 days only.
The Blue Ribbon Committee yielded the same finding and the amount traced was sourced from the
stolen funds of Bangladesh Bank.
BRHI claims that Solaire is not covered under the AMLA at the time the incident happened.
BRHI also explained that the BDO Account is for peso payments/ deposits or remittances to BRHI.
That details of the account were given to the junket operators, players or high rollers to enable them to
deposit money that they will use to engage in gaming in Solaire.
Premium Players are required to put up "front money" before they can play in Solaire.
A chinese national Ding advised BRHI that he and his companions will remit millions of dollars to
Solaire to be used by a group of Chinese players on CNY. Wang and Gao were known high rollers and
previously played in Solaire. The amount was used by the group of Ding as front money to play in
Solaire.
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BRHI claims that at the time of the remittance, there was no reason for it to suspect that the amount
could be related to any unlawful activity as the same was received and deposited in the account of BRHU
in the regular course of business.
When the new articles broke out about the hacking of Bangladesh Bank account and Solaire, BRHI
deemed it to take reasonable measures if the same turned out trues. BRHI froze the remaining balance
of the Ding Group.
Upon receipt of the freeze order of the CA, BRHU filed an urgent motion to lift freeze order while
AMLC filed an urgent motion for additional period of freeze order.
The CA granted the urgent motion to lift freeze order by BRHI on the ground that AMLC failed to
establish within the period given that the proceeds of the Subject account form part of the funds stolen
from Bangladesh Bank remains within the realms of speculation.
BRHI argues tat assuming that the amounts received by BRHI from PhilRem are laundered money, the
same is no longer with BRHI. Since the money was used by the group to purchase non-negotiable chips
which have been transferred to junket operators or played in Solaire's premium program.
ISSUE: Whether the CA erred in lifting the freeze order earlier issued against BRHI. (YES.)
RULING: A freeze order may only be effective for a maximum period of six months; hence, even
assuming that the Urgent Motion for Additional Period of Freeze Order should have been granted, the
six-month maximum period has elapsed.
The Court agrees with BRHI that the petition has become moot and academic.
R.A. 9160, otherwise known as the AMLA, as amended by R.A. 10365, provides that:
Section 10. Freezing of Monetary Instrument or Property. – Upon a verified ex parte petition by the
AMLC and after determination that probable cause exists that any monetary instrument or property is
in any way related to an unlawful activity as defined in Section 3(i) hereof, the Court of Appeals may
issue a freeze order which shall be effective immediately, and which shall not exceed six (6) months
depending upon the circumstances of the case: Provided, That if there is no case filed against a person
whose account has been frozen within the period determined by the court, the freeze order shall be
deemed ipso facto lifted: Provided, further, That this new rule shall not apply to pending cases in the
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courts. In any case, the court should act on the petition to freeze within twenty-four (24) hours from
filing of the petition. If the application is filed a day before a nonworking day, the computation of the
twenty-four (24)-hour period shall exclude the nonworking days.
A person whose account has been frozen may file a motion to lift the freeze order and the court must
resolve this motion before the expiration of the freeze order.
No court shall issue a temporary restraining order or a writ of injunction against any freeze order, except
the Supreme Court.
The previous versions of Section 10 of the AMLA before the current amendment do not specify the
maximum period within which a Freeze Order may be effective. However, as early as 2005, A.M. No.
05-11-04-SC or the Rules of Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing of
Monetary Instrument, Property, Or Proceeds Representing, Involving, or Relating to an Unlawful
Activity or Money Laundering Offense Under R.A. 9160, as amended has already specified that any
extension for the issuance of a freeze order should not exceed six months.
Clearly, a Freeze Order may not be issued indefinitely, lest the same be characterized as a violation of the
person’s right to due process and to be presumed innocent of a charge. In this case, the Freeze Order was
issued by the CA on March 15, 2016. Even assuming that the CA erred in failing to issue an extension
of the Freeze Order, nevertheless, a period of more than six months has already elapsed. If we grant the
petition now, it has been more than four years from the issuance of the Freeze Order. This development
squarely falls under the principle of a moot and academic issue as We have earlier defined. The
adjudication of this case has no practical use and value owing also to the fact that as manifested by the
BDO, upon receipt of the CA Resolution dated March 15, 2016 granting BRHI’s motion to lift the
freeze order, BDO has complied with the order to unfreeze BRHI’s Account No. 6280225150.
The argument of the AMLC that the case is not yet fait acompli because the BDO may just re-freeze
Account No. 6280225150 upon granting of the petition is specious. Assuming that the petition is
meritorious, We cannot order the re-freezing of the subject account for to do so would be to put BRHI
in an unfair situation where its bank account is being frozen for a transaction that has happened four
years ago and where it was not yet proven that it indeed participated in money laundering activities.
38. REPUBLIC V. ONGPIN

G.R. No. 207078, June 20, 2022.
Ponente: LEONEN, J.
102
Student Assigned: AROLLADO
DOCTRINE: The remedies of freeze order and order of bank inquiry are extraordinary, issued only
upon a finding of probable cause that the accounts sought to be frozen or inquired into are related to any of
the predicate crimes under the Anti-Money Laundering Act. The burden of proving probable cause always
rests with the Anti-Money Laundering Council, never with the account owners.
FACTS: On April 7, 2009, Deltaventure applied for a ₱150,000,000.00 credit line with the DBP
Baguio City Branch. As security for the loan, Deltaventure offered to pledge its shares in Philweb
Corporation (Philweb), as well as those registered in the following corporations' names: Azurestar
Corporation, Bacong Highland Realty Corporation, Beckel Realty Corporation, Itogon Realty
Corporation, Labilab Corporation, Sunrise Sunset Island Corporation, and Tocmo Realty
Corporation.At the time Deltaventure applied for the credit line, it was beneficially owned by Roberto
V. Ongpin (Ongpin), a former member of the DBP Board of Directors. Ongpin's executive secretary at
Philweb, Josephine A. Manalo (Manalo), served as Deltaventure's president;and Ma. Lourdes A. Torres
(Torres), its treasurer.
The next day, on April 8, 2009, the DBP Executive Credit Committee recommended approving the
₱150,000,000.00 credit line application. A week later, on April 15, 2009, the DBP Board of Directors
approved it.
On November 4, 2009, Deltaventure applied for another credit line with DBP, this time for
₱510,000,000.00. Its stated purpose was to acquire from DBP 50,000,000 shares of stock in Philex
Mining Corporation (Philex), to be registered directly in the name of Goldenmedia Corporation
(Goldenmedia). As security, Goldenmedia pledged back to DBP the Philex shares that would be
registered in its name. Like Deltaventure, Goldenmedia was beneficially owned by Ongpin.
That same day, per the DBP Executive Credit Committee's recommendation, the DBP Board of
Directors approved Deltaventure's application for the ₱510,000,000.00 credit line.
A day after, on November 5, 2009, DBP, through its Board of Directors, sold 50,000,000 of its Philex
shares to Deltaventure at ₱12.75 per share, totaling ₱637,500,000.00.Deltaventure paid
₱127,500,000.00 in cash as down payment, and paid the remaining ₱510,000,000.00 in full through
103
the credit line granted by DBP a day before. As Deltaventure had requested, the shares were registered
directly in Goldenmedia's name. In turn, Goldenmedia pledged the Philex shares in favor of DBP.
On December 2, 2009, DBP sold all of its 59,339,000 Philex shares to Two Rivers Pacific Holdings
Corporation (Two Rivers). On the same day, Goldenmedia sold to Two Rivers 123,221,372 of its Philex
shares, which included the 50,000,000 Philex shares Goldenmedia had earlier acquired using the
proceeds of Deltaventure's loan from DBP. Together with Boerstar Corporation (Boerstar), Elkhound
Resources, Inc. (Elkhound), and Walter Brown, DBP and Goldenmedia sold their shares to Two Rivers
for a negotiated price of ₱21.00 per share. This block sale resulted in Two Rivers acquiring controlling
interest in Philex.
Notably, Two Rivers is partly owned by First Pacific International, Ltd., which is in turn a wholly
owned subsidiary of First Pacific Company, Ltd., headed by its managing director and chief executive
officer, Manuel V. Pangilinan. Ongpin was Philex's vice chair.
For these transactions DBP Chair Jose Nuñez and President Francisco F. Del Rosario filed a Complaint-
Affidavit before the Office of the Ombudsman. They contend that the approval of the ₱150,000,000.00
and ₱510,000,000.00 loans to Deltaventure violated Republic Act No. 8791, in relation to Republic
Act No. 7653, on ascertaining the creditworthiness of credit applicants; and of Section 3(e), (g), and
(h)of Republic Act No. 3019.
The Anti-Money Laundering Council found in its November 14, 2012 Resolution that the two loans
to Deltaventure were marred with anomalies. Allegedly, DBP did not conduct credit investigations and
loaned substantial amounts to a corporation with an unstable financial standing such as Deltaventure.
On December 11, 2012, the Anti-Money Laundering Council filed an Ex Parte Application for Bank
Inquiry before the Court of Appeals, praying that it be allowed to inquire into the bank accounts listed
in the Petition for Freeze Order. This application was docketed under the same docket number for the
Petition for Freeze Order.
A day after, on December 12, 2012, the Anti-Money Laundering Council moved to have the Freeze
Order extended for six months, from December 26, 2012 to June 26, 2013. It said that it was conducting
further investigation on the frozen bank accounts for the possible filing of other appropriate legal
actions, including forfeiture of funds. However, with the sheer number of bank accounts involved, and
the complex nature of the financial investigation and analysis needed to determine the proper remedies,
it claimed that investigation may not be completed within the original 20-day period.In a December 13,
2012 Resolution, the Court of Appeals granted the Application for Bank Inquiry. It ordered the banks
104
to allow the Anti-Money Laundering Council and its authorized representatives to access all records
relating to the accounts.
Ongpin, Manalo, Torres, Deltaventure, Goldenmedia, Boerstar, Elkhound, and Compact Holdings,
Inc. (Compact Holdings)—collectively, Ongpin, et al.—filed a joint Urgent Motion to Lift Freeze
Order and an Amended/Supplemental Motion to Lift Freeze Order, contending that no illegally tainted
money went, passed, or was otherwise laundered through their accounts. They alleged that Deltaventure
was "fully qualified to apply for the [l]oans" which they insisted were not behest loans, as they were paid
in full, ahead of the due date, and with interest.
ISSUE: Whether there was probable cause to believe that the frozen accounts were related to an
unlawful activity. (YES.)
RULING: It is true that by issuing the Freeze Order and even extending it, probable cause that the
frozen accounts are related to the alleged unlawful activity was already established. This finding,
however, was not final since respondents Ongpin, Manalo, and Torres moved for reconsideration.
In moving for reconsideration, respondents put forward evidence to prove that the funds in their
accounts came from legitimate sources. The burden of evidence shifted back to the petitioner to prove
that there was probable cause to justify the Freeze Order's extension.
Contrary to petitioner's argument, the burden of proof has never shifted to respondents. It confused
"burden of proof" with "burden of evidence." "Burden of proof" refers to "the duty of a party to present
evidence on the facts in issue necessary to establish [their] claim or defense by the amount of evidence
required by law." In actions for the issuance of a freeze order, the burden of proving probable cause
always rests with the Anti-Money Laundering Council.
Once it has established a prima facie case against the owner of the accounts sought to be frozen, the
"burden of evidence" shifts to the owner to present counterevidence and prove that their accounts are
funded by legitimate sources. If the counterevidence balances the evidence of probable cause, the
burden of evidence shifts back to the Anti-Money Laundering Council to justify the continued freezing
of the accounts. Unfortunately, here, the petitioner miserably failed to do so.
39. YAMBAO V. REPUBLIC

G.R. No. 171054, January 26, 2021
105
DOCTRINE: A freeze order is not dependent on a separate criminal charge, much less does it depend on
a conviction. Based on Section 10 of R.A. No. 9160, as amended, there are only two requisites for the
issuance of a freeze order: (1) the application ex-parte by the AMLC and (2) the determination of probable
cause by the CA.
A freeze order is an extraordinary and interim relief. The primary objective of a freeze order is to
temporarily preserve monetary instruments or property that are in any way related to an unlawful activity
or money laundering, by preventing the owner from utilizing them during the duration of the freeze order.
The relief is pre-emptive in character, meant to prevent the owner from disposing of his property and
thwarting the State's effort in building its case and eventually filing civil forfeiture proceedings and /or
prosecuting the owner.
FACTS: The OMB noted that Gen. Ligot declared in his Statements of Assets and Liabilities (SALNs)
that his sources of income mostly came from his salary as an officer of the Armed Forces of the
Philippines (AFP). Apparently, however, Gen. Ligot and his spouse, Erlinda Yambao Ligot (Erlinda),
have investments and other properties registered in their names that were not declared in Gen. Ligot's
SALNs.
The OMB likewise found that Edgardo Tecson Yambao, Erlinda 's younger brother, (petitioner) is a
mere dummy and/or nominee of the spouses Ligot. Petitioner appears to be the owner Mabelline Foods,
Inc. but SEC records reveal that the company was not generating considerable income to enable
petitioner to acquire substantial assets. Mabelline Foods, Inc. uses as its principal address the residential
address of Gen. Ligot and family, buttressed the OMB's conclusion that petitioner and his wife are mere
nominees of Gen. Ligot and all properties registered in petitioner's name are actually owned by Gen.
Ligot and his family.
Finding the existence of probable cause that the monetary instruments and properties are related to an
unlawful activity, the CA granted the ex parte application of the freeze order. The motion for extension
thereon was likewise granted. Yambao contended that the CA deprived him of his properties without
due process of law when he was not given the opportunity to refute the allegations of the AMLC in its
Ex-parte Application for freeze order, and that the same was extended despite the absence of sufficient
evidence to support the finding of probable cause that the funds used to acquire his properties came
106
from an illegal activity. He also contended that he should be heard separately from his co-respondents
in the Freeze Order case, petitioner insists that his evidence and defenses are separate and distinct from
the Ligots' defenses.
ISSUE: Whether the extension of the freeze order for more than six (6) months deprived Yambao of his
properties without due process. (YES.)
RULING: To begin with, a freeze order is not dependent on a separate criminal charge, much less does
it depend on a conviction. Based on Section 10 of R.A. No. 9160, as amended, there are only two
requisites for the issuance of a freeze order: (1) the application ex-parte by the AMLC and (2) the
determination of probable cause by the CA.
In resolving the issue of whether probable cause exists, the CA's statutorily-guided determination's focus
is not on the probable commission of an unlawful activity (or money laundering) that the OMB has
already determined to exist, but on whether the bank accounts, assets, or other monetary instruments
sought to be frozen are in any way related to any of the illegal activities enumerated under R.A. No.
9160, as amended. Otherwise stated, probable cause refers to the sufficiency of the relation between an
unlawful activity and the property or monetary instrument which is the focal point of Section 10 of
R.A. No. 9160, as amended.
Nonetheless, the Court, also in the Ligots' case, clarified that a freeze order cannot be issued for an
indefinite period. In fact, in said case, We held that the continued extension of the freeze order beyond
the six-month period violated the Ligots' right to due process.
A freeze order is an extraordinary and interim relief. The primary objective of a freeze order is to
temporarily preserve monetary instruments or property that are in any way related to an unlawful
activity or money laundering, by preventing the owner from utilizing them during the duration of the
freeze order. The relief is pre-emptive in character, meant to prevent the owner from disposing his
property and thwarting the State's effort in building its case and eventually filing civil forfeiture
proceedings and /or prosecuting the owner.
The final sentence of Section 10 of the Anti-Money Laundering Act of 2001 provides, "[t]he freeze
order shall be for a period of twenty (20) days unless extended by the court." In contrast, Section 55 of
the Rule in Civil Forfeiture Cases qualifies the grant of extension "for a period not exceeding six months"
"for good cause" shown.
107
However, in the Ligot case, the CA extended the freeze order over the Ligots' various bank accounts and
personal properties until after all the appropriate proceedings and/or investigations being
conducted are terminated. By its very terms, the CA resolution effectively bars the Ligots from
using any of the property covered by the freeze order until after an eventual civil forfeiture
proceeding is concluded in their favor and after they shall have been adjudged not guilty of
the crimes they are suspected of committing. These periods of extension are way beyond the
intent and purposes of a freeze order which is intended solely as an interim relief; the civil and
criminal trial courts can very well handle the disposition of properties related to a forfeiture
case or to a crime charged and need not rely on the interim relief that the appellate court issued.
Anent petitioner's insistence to be separated from his co-respondents, the petitioner being impleaded as
an alleged dummy or nominee of Gen. Ligot, indubitably, the charges against petitioner and the Ligots
are anchored on the same facts and their defenses are necessarily intertwined.
40. REPUBLIC V. NG
June 16, 2021, G.R. No. 239047
Ponente: Inting, J.
DOCTRINE: After the issuance of the PAPO, the burden is shifted to account holder who "may for good
cause show why the provisional asset preservation order should be lifted."; It is not necessary for the purpose
of determining whether to issue an APO, to identify the specific amount transferred to each account
considering that the money has one source and the account holder of all the accounts is the same.
FACTS: Benhur K. Luy (Luy) is an employee of JLN Group of Companies (JLN Corporation) owned
and managed by Janet Lim Napoles (Napoles) alias "Jenny Lim" and her family. Luy executed a
statement on JLN Corporation's illegal business practices. Luy averred that he was entrusted to establish
non-governmental organizations (NGOs) which served as conduits to illegally funneled government
funds. The funds were then remitted to Napoles' personal bank accounts which Luy also created.
Merlina Pablo Suñas (Suñas), a project coordinator and employee of JLN Corporation, executed a
statement concerning her personal knowledge of Napoles' unlawful activities. In particular, Suñas
108
alleged that they submitted fictitious liquidation papers to the concerned government agencies in the
implementation of the Malampaya fund worth P900,000,000.00.
Luy, Suñas, and other employees of JLN Corporation, namely, Gertrudes K. Luy (Gertrudes) and
Annabelle Luy-Reario (Annabelle) executed a Joint Sworn Statement providing minute details of
Napoles' operations.
The issuance of the statements prompted the National Bureau of Investigation (NBI) to send a Letter
to the AMLC requesting a financial investigation in relation to any suspected financial transactions of
Luy and Napoles. The Office of the Ombudsman sent a similar Letter to the AMLC requesting its
assistance to conduct an examination and secure pertinent records and documents concerning several
accounts, including those of Luy and Napoles, which were found to be related to the Priority
Development Assistance Fund (PDAF) scam.
NBI filed eight complaints for Plunder under Sec. 2 of RA 7080 and for violation of Sec. 3(e) of RA
3019 against Napoles and other government officials including Senators Ramon Revilla III, Juan Ponce
Enrile, and Jose "Jinggoy" Ejercito Estrada (Estrada), as part of the PDAF scheme.
The AMLC filed before the CA an ex parte application under Section 11 of RA 9160, praying for the
issuance of an order to authorize it to inquire into the bank accounts of those charged in the
Informations. The CA granted the application. In the Resolution, the CA allowed a supplemental bank
inquiry on other persons who were revealed to be connected to the earlier examined accounts, including
the account of Juan T. Ng (Ng), a supposed close friend of Senator Estrada.
The AMLC issued an Inquiry Report on the transactions related to Senator Estrada's involvement in
the pork barrel scam. The report revealed significant transfers from several accounts of Senator Estrada
to Ng's accounts, including one to Metrobank Account No. 3067507917 (subject account).
The Republic, represented by the AMLC, filed Petition for Civil Forfeiture (With Prayer for the
Issuance of a Provisional Asset Preservation Order and an Asset Preservation Order) (Petition for
Forfeiture), against Ng before the RTC. The Republic prayed for the issuance of a Provisional Asset
Preservation Order (PAPO) against Ng, alleging that there is a strong and convincing evidence
concerning the involvement of his subject account in the pork barrel scam. The Republic also prayed
for the issuance of an Asset Preservation Order (APO) to prevent funds from being removed,
transferred, concealed, or disposed. The RTC found the Republic's allegations sufficient in form and
substance. In an Order, the RTC issued a PAPO ex parte after finding that there is probable cause that
the subject account may be related to unlawful activities covered by RA 7080. The RTC set the
summary hearing on the issuance of the APO.
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In an Order, the RTC denied the Republic's prayer for the issuance of an APO and granted Ng's motion
to lift/discharge the PAPO. The RTC ruled that apart from the fact that three JLN Corporation's
checks were deposited with the subject account, it found no clear and convincing explanation from the
Republic on how the checks were credited to the subject account. It held that Ng is a well-established
businessman in the business of extending loans to his friends with Chinese blood. It further held that it
was not shown that when Ng received Napoles' payment for the loans the latter obtained from the
former, Ng was aware that the money were proceeds of the PDAF scam.
On appeal, the CA denied the Republic’s petition. The CA found that the allegation cannot serve as a
basis for the issuance of an APO; that the Republic failed to reasonably establish the subject account's
connection to the transferred amount; that the Republic also failed to specify the exact portion of
P16,637,000.00 received by the subject account; and that there was a discrepancy in the amounts and
dates stated in the Resolution authorizing the conduct of the bank inquiry with the alleged funds
received by the subject account from JLN Corporation. The CA further ruled that the Republic failed
to substantiate that the transfers were made during the material dates of the pork barrel scam. It rejected
the Republic's contention that an APO is issued as a matter of course in a civil forfeiture proceeding,
ruling that the RTC has full discretion, after a summary hearing, whether to modify or lift a PAPO or
to thereafter issue an APO.
ISSUE: Whether the issuance of an Asset Preservation Order (APO) is proper. (YES.)
RULING: The CA correctly ruled that after the issuance of the PAPO, the RTC still has the discretion
whether to lift it or to issue an APO instead. However, the discretion must not be exercised arbitrarily.
The RTC must conform with the procedure set forth under Sections 11 and 12 of A.M. No. 05-11-04-
SC, which provide:
Section 11. Ex Parte Issuance of Provisional Asset Preservation Order. — Where the executive
judge of the regional trial court or, in his absence, the vice-executive judge or, in their absence, any
judge of the regional trial court available in the same station, has determined that probable cause
exists on the basis of allegations of a verified petition sufficient in form and substance, with, a
prayer for the issuance of an asset preservation order, that the monetary instrument, property, or
proceeds subject of the petition are in any way related to an unlawful activity as defined in Section
3(i) of Republic Act No. 9160, as amended by Repubhc Act No. 9194, the court may issue ex parte
a provisional asset preservation order effective immediately forbidding any transaction,
withdrawal, deposit, transfer, removal, conversion, concealment or other disposition of the subject
monetary instrument, property, or proceeds. Such order shall be effective for a period of twenty days
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from the respective dates of service to respondent or any person acting in his behalf, and upon each
covered institution or government agency in accordance with Section 14 of this Rule.
Section 12. Summary Hearing. — The court shall schedule a hearing at a date and time within
the twenty-day period at which the respondent may for good cause show why the provisional asset
preservation order should be lifted. The court shall determine within the same period whether the
provisional asset preservation order should be modified or lifted or an asset preservation order
should issue and act accordingly.
It is clear from Section 12 of A.M. No. 05-11-04-SC that after the issuance of the PAPO, the burden is
shifted to respondent who "may for good cause show why the provisional asset preservation order
should be lifted." It is imperative upon the respondent to prove that the monetary instrument, property
or proceeds subject of the petition are not related to an unlawful activity.
In this case, Ng asserted that Napoles was an acquaintance he met during one of the parties sponsored
by Mr. George Ty, Chairman of Metrobank; that while he has a friendly acquaintance with Napoles,
they had no business transactions. Ng explained that the money involved was only a loan to Napoles.
The RTC accepted Ng's explanation, without presentation of any document to support the supposed
loan. The RTC then ruled that the Republic failed to give a clear and convincing explanation that the
subject account is related to the unlawful activities of Napoles.
The Court finds that the ruling of the RTC, sustained by the CA, does not conform with the evidence
on record. Ng admitted to receiving the amount of P24,500,000.00 deposited to the subject account
from Napoles, which he claimed was payment for the loans he extended. Coupled with the admission,
the Court underscores that Ng failed to present any loan agreement to substantiate his claim. To the
Court, Ng's mere allegation that Napoles was just an acquaintance with whom he had no business
transactions, but to whom he extended loans on several occasions by way of accommodation because of
their Chinese heritage, tradition, and culture does not satisfy the good cause required under Section 12
of A.M. No. 05-11-04-SC in order for the PAPO to be lifted.
It was shown that the amount of P16,637,000.00 was transferred to seven Metrobank accounts, all in
the name of Ng. One of the seven accounts is the subject account. The CA ruled that the AMLC failed
to specify what part of the P16,637,000.00 was transferred to the subject account. The Court does not
find it necessary, for the purpose of determining whether to issue an APO, to identify the specific
amount transferred to each account considering that the money has one source and the account holder
of all the accounts is the same.
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To be clear, the issuance of a PAPO or an APO is only to secure the funds contained in the subject
account which, at the time of the issuance of the PAPO, had a frozen balance of P962,286.27. The
amount is minuscule considering the money involved in the PDAF scam. The civil foreclosure will still
proceed where the parties will be given opportunities to present more evidence to prove their respective
claims. The Court also takes into account the AMLC's argument that the subject account is not the
only account of Ng that received transfers from Napoles and JLN Corporation, but the subject account
is the only remaining open account since the others were already closed. Hence, prudence and the
evidence presented would justify the issuance of an APO pending the outcome of the civil foreclosure
case. Considering the foregoing, the Court disagrees with the CA that the RTC did not gravely abuse
its discretion in issuing its Orders of lifting the PAPO.
41. LINGAD V. PEOPLE

G.R. No. 224945, October 11, 2022.
Ponente: LEONEN, J.
DOCTRINE: The predicate or related crimes under the AMLA are offenses that involve proceeds—any
amount or type of money or property—that can be laundered. Section 3(1) of the Anti-Money Laundering
Act defines proceeds as "an amount derived or realized from an unlawful activity." In turn, Section 4 of
the law only provides that one commits money laundering when they transact the proceeds knowing that
this came from an unlawful activity. It does not require that the money launderer should have
committed the unlawful activity. It only states that the money launderer should have known that the
proceeds came from an unlawful activity. The offense likewise does not require the identity of the persons
who commit the unlawful activity; it only requires that the proceeds come from such activity.
FACTS: Girlie J. Lingad was employed in the Olongapo City Branch of United Coconut Planters Bank
(UCPB) from January 1, 1994 until April 19, 2004. Before she left UCPB, she was a marketing associate
and branch marketing officer trainee. She handled the opening, terminating, and withdrawing of client
accounts and placements. Her position gave her access to the bank's computer system, with User ID
"oloma01" and Teller ID No. 2840.
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On April 19, 2004, Lingad went on absence without official leave. Later, UCPB requested the Anti-
Money Laundering Council to conduct a fact-finding investigation on her transactions. The Council
discovered that Lingad had processed four anomalous transactions and left for the United States on
April 20, 2004 with her children. The anomalous transactions consisted of unauthorized withdrawals
and preterminations of money market placements with the money transferred to accounts in the names
of MV2 Telecoms and Lingad's brother.
According to the prosecution, the Anti-Money Laundering Council's investigation revealed that Lingad
issued several manager's checks with no sufficient funds and processed unauthorized withdrawals or
preterminations of money market and similar placements.
Lingad committed several anomalous transactions. The first anomalous transaction involves the
P10,200,000.00 placement which was preterminated on July 3, 2002, but Chieng denied withdrawing
the money, and neither was there any signed payment slip for it.
The second anomalous transaction involved Chieng's money market placement for P12,370,677.50,
which was preterminated on November 4, 2002, again without any indorsement from Chieng. On the
same day, the money was used to open a savings account in Chieng's name. Later, amounts from this
account were transferred to other accounts on different dates, coursed through debit memos where no
cash was involved.
The third anomalous transaction still involved Chieng’s account wherein 11 preterminations
amounting to P11,070,000.00 were made from this account between August 4 and 25, 2003, leaving a
zero balance as of the last pretermination on August 25, 2003. Chieng said that he issued no payment
slips and did not preterminate the placement, noting that Lingad had still issued him an
acknowledgment receipt showing his placement was intact.
The fourth anomalous transaction involving Chieng’s other account concerns six preterminations of
these accounts from December 4, 2003 to January 8, 2004. No signed withdrawal slip was shown, and
Chieng denied withdrawing these amounts, saying that his placements were still intact.
The prosecution also noted that Lingad and her children flew to the United States without requesting
approval and processing her clearance. Chieng has made 30 to 40 placements in UCPB, and the
unfunded manager's checks and credited accounts without contra-accounts amounted to
P83,698,208.81.
Lingad either denied processing the transactions in question or testified that she could not recall making
them. She discussed that all the bank transactions she processed were always supervised by bank officers,
who would verify and approve them to prevent unauthorized transactions. She also pointed out that she
had very limited functions, access to the cash and record vaults, and authority for approving or signature
verification. She also argued that even her signature in manager's checks would always need to be
conformed to and co-signed by an authorized bank officer, except when none was present. Lingad added
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that in December 2003, she informed her superiors that she was intending to migrate to the United
States with her family. After 10 years in UCPB, she availed of her retirement plan and was expecting to
receive a lump sum plus accumulated sick and vacation leaves. She even had a despedida on her last day
at work.
The RTC found Lingad guilty of violating Section 4(a) of the Anti-Money Laundering Act by
committing qualified theft and transacting some of its proceeds to make them appear to have come from
legitimate sources.
On appeal, the CA affirmed.
Lingad argued that the prosecution failed to prove that she is guilty of violating Section 4(a) of the Anti-
Money Laundering Act. She claims that she is not the culprit as she was not an officer and could not
unilaterally approve any transaction. All transactions she processed were reviewed by a superior, she says,
adding that her User and Teller IDs could have been used by another employee.
Republic/OSG argued that all the elements of qualified theft and money laundering were proven when
it was shown that petitioner had preterminated and withdrawn funds from the accounts of UCPB's
clients without their knowledge.
ISSUE: Whether Lingad is guilty of violation Section 4(a) of the Anti-Money Laundering Act. (YES.)
RULING: At the time petitioner was tried for the offense in 2006, money laundering pertained to the
transacting of proceeds of an unlawful activity to make it appear to have originated from legitimate
sources.
Section 4 of the Anti-Money Laundering Act, as amended by Republic Act No. 9194 in 2003, reads:
SECTION 4. Money Laundering Offense. — Money laundering is a crime whereby the proceeds of an
unlawful activity as herein defined are transacted, thereby making them appear to have originated from
legitimate sources. It is committed by the following:
(a) Any person knowing that any monetary instrument or property represents, involves, or relates to,
the proceeds of any unlawful activity, transacts or attempts to transact said monetary instrument
or property.
(b Any person knowing that any monetary instrument or property involves the proceeds of any
) unlawful activity, performs or fails to perform any act as a result of which he facilitates the
offense of money laundering referred to in paragraph (a) above.
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(c) Any person knowing that any monetary instrument or property is required under this Act to be
disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so.
Thus, under Republic Act No. 9194, the following were the elements of money laundering: (1) there
is an unlawful activity—any act or omission, or a series or combination of acts or omissions, involving
or directly related to offenses enumerated under Section 3 of the law; (2) the proceeds of the unlawful
activity are transacted by the accused; (3) the accused knows that the proceeds involve or relate to the
unlawful activity; and (4) the proceeds are made to appear to have originated from legitimate sources.
Under Section 3 of the Anti-Money Laundering Act, qualified theft is one of the unlawful activities
from which proceeds could be derived.
In withdrawing money and preterminating accounts without authority, petitioner transacted proceeds
from the crime of qualified theft. By taking advantage of her position, she took money from UCPB
clients without their knowledge and consent. Petitioner held a position of trust and confidence, as she
handled the opening, termination, and withdrawal of client accounts and placements, and also had
access to the bank's computer system. She processed all these transactions using her User ID "oloma01"
and Teller ID No. 2840. Intent to gain may be seen from the unauthorized fund transfers to other
accounts and the use of a carefully planned scheme to commit the theft. Petitioner then committed
money laundering when she transacted the proceeds of the qualified theft through manager's checks or
transferred them to other money market placements to give the appearance that the money markets were
still subsisting.
Predicate Offense
Money laundering generally involves a predicate offense. A predicate offense is a crime that is a
component of another offense. In money laundering, the predicate offense is usually an unlawful
activity that generates proceeds of money or property. In this case, for instance, the predicate offense
was qualified theft.
However, the predicate offense in money laundering is distinct from the offense of money laundering,
such that the two offenses may be prosecuted in separate criminal actions.
Republic Act No. 10365, which amended the Anti-Money Laundering Act in 2013, explicitly
states that the prosecution of the money laundering offense shall proceed independently of any
action relating to the unlawful activity:
SECTION 5. Section 6 (a) of [Republic Act No. 9160] is hereby amended to read as follows:
3
SEC. 6. Prosecution of Money Laundering. —
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A Any person may be charged with and convicted of both the offense of money laundering
) and the unlawful activity as herein defined.
B The prosecution of any offense or violation under this Act shall proceed independently
) of any proceeding relating to the unlawful activity. (Emphasis supplied)
This is also stated in the latest Implementing Rules and Regulations of Republic Act No.
9160. The elements of each offense are distinct. Thus, the "elements of the unlawful activity,
including the identity of the perpetrators and the details of the commission of the unlawful
activity, need not be established by proof beyond reasonable doubt in the case for [money
laundering]":
Generally, the elements of predicate crimes must be proven beyond reasonable doubt. This is consistent
with Article III, Section 14 of the Constitution. Thus, in all criminal actions, the prosecution must
prove the accused's guilt beyond reasonable doubt. However, the unlawful activity involved and the
money laundering itself may or may not involve the same perpetrators. To recall, what is
punished as an offense under the Anti-Money Laundering Act is the act of laundering the proceeds of
an unlawful activity.
The predicate or related crimes under the AMLA are offenses that involve proceeds—any amount or
type of money or property—that can be laundered. Section 3(1) of the Anti-Money Laundering Act
defines proceeds as "an amount derived or realized from an unlawful activity." In turn, Section 4 of the
law only provides that one commits money laundering when they transact the proceeds knowing that
this came from an unlawful activity. It does not require that the money launderer should have
committed the unlawful activity. It only states that the money launderer should have known that the
proceeds came from an unlawful activity. The offense likewise does not require the identity of the
persons who commit the unlawful activity; it only requires that the proceeds come from such activity.
A reading of the listed unlawful activities and the nature of money laundering reveals that money
laundering may involve a situation where the predicate unlawful activity is not necessarily committed by
the money launderer. The unlawful activity may be a separate crime, possibly committed by a different
person.
For example, Person A commits kidnapping for ransom under Article 267 of the Revised Penal Code,
an unlawful activity under the Anti-Money Laundering Act. Person A asks Person B for assistance in
concealing the ransom money. Person B knows that it was ransom money, but agrees to keep it in a
location unchecked by authorities. In this example, Person A is the only person who may be charged
with kidnapping, though Person A may still be charged with money laundering. Person B, however,
may be charged with money laundering, but not kidnapping.
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Thus, the action for money laundering may proceed independently of any proceeding involving the
unlawful activity. A charge for money laundering may still be filed against Person B, and it need not
depend on the outcome of the kidnapping charge against Person A. It is not necessary to first obtain a
finding of guilt in the kidnapping case before the prosecution of Person B's money laundering offense.
Nonetheless, this Court highlights that an element of the money laundering offense is that the money
or property involved constitutes proceeds from an unlawful activity. Necessarily, it must still be proven
beyond reasonable doubt that the money or property forms proceeds from an unlawful activity.
Thus, while the criminal action for the unlawful activity may proceed independently of the money
laundering charge, and the guilt of the person who committed the unlawful activity need not be
determined first, it must still be proven that the money or property in the money laundering offense is
proceeds from an unlawful activity. This entails proving beyond reasonable doubt particular elements
of that unlawful activity.
In the example above, before Person B can be found guilty of money laundering, the prosecution must
prove beyond reasonable doubt that the money forms proceeds from the kidnapping. The prosecution
need not prove who committed the kidnapping, but it must still prove that the money was extorted for
the release of the person deprived of liberty. It must be proven beyond reasonable doubt that the nature
of the proceeds is from an unlawful activity. Otherwise, an element of the offense of money laundering
is missing. The act cannot constitute money laundering.
In this case, it was first shown that the money involved is proceeds from qualified theft. The prosecution
needed to show that the amounts were taken with intent to gain from third parties by grave abuse of
confidence. The prosecution then proved that petitioner, knowing the nature of the amounts as
proceeds from qualified theft, transacted it through manager's checks or transferred them to other
money market placements to give the appearance that the money markets were still subsisting. Thus,
petitioner was charged with and found guilty of money laundering.
In any case, here, petitioner is only being prosecuted for the offense of money laundering. While the lower
courts found that petitioner also committed the separate predicate offense of qualified theft, petitioner
shall only be convicted for the offense of money laundering.
The petitioner is found guilty of violation of Sec. 4(a) of the AMLA. Petitioner has fully served her
sentence hence ordered immediately released.
42. REPUBLIC VS. SANDIGANBAYAN

G.R. Nos. 232724-27, February 15, 2021.
Ponente: LEONEN, J.
117
DOCTRINE: The AMLC is not prohibited from disclosing information regarding covered and
suspicious transactions under sec 3(a) of the AMLA. The Anti-Money Laundering Council is not merely
a repository of reports and information on covered and suspicious transactions. It was created precisely to
investigate and institute charges against those suspected to commit money laundering activities. The
criminal prosecution of such offenses would be unduly hampered if it were to be prohibited from disclosing
such information. For the AntiMoney Laundering Council to refuse disclosing the information required
of it would be to go against its own functions under the law.
FACTS: This Petition is an offshoot of a criminal case. The Office of the Special Prosecutor charged
former First Gentleman Jose Miguel T. Arroyo (Arroyo) with, among others, plunder for his
involvement in the Philippine National Police's anomalous purchase of two secondhand helicopters.
The seller Lionair Inc testified thru its president that Arroyo was the real owner of the helicopters as
they were sold to him who in turn deposited the payment to Lionairs account with Union Bank. To
verify the source of the deposits, the Office of the Special Prosecutor presented Katrina Cruz-Dizon
(Cruz-Dizon), the manager of the Union Bank branch where the account was maintained. Cruz-Dizon
testified that the account was closed on March 6, 2006, and as five years had lapsed the bank had already
disposed of the account records. She suggested that the BSP the Anti-Money Laundering Council
(Council) may have reports on the transactions, as banks are required to report covered transactions.
The Council moved to quash the Subpoena, arguing that whatever information it has on Lionair's bank
account is confidential under the Anti-Money Laundering Act. petitioner avers that Section 9 (c) covers
it, and not only financial institutions. To prohibit financial institutions from disclosing reports but
allow petitioners to divulge the same reports would be absurd, it says, pointing out that such an act
would be indirectly doing what cannot be done directly. The respondent Office of the Ombudsman
argues that the Sandiganbayan did not abuse its discretion when it denied petitioner's Motions. It says
the prohibition on disclosure under Section 9 (c) of the Anti-Money Laundering Act only applies to
covered persons — such as financial institutions, dealers, and company service providers — which do
not at all include petitioners. Respondent avers that while the Anti-Money Laundering Act does intend
to preserve the confidentiality of bank transactions, its fundamental objective remains to prohibit
money laundering through the reporting of covered and suspicious transactions.
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ISSUE: Whether Sec. 3(A) of the AMLA prohibits the Council from disclosing confidential and
suspicious transaction reports as a covered institution. (NO.)
RULING: First, as the text of the Anti-Money Laundering Act reveals, petitioner is not one of the
covered institutions prohibited from disclosing information on covered and suspicious transactions.
Section 3 (a) enumerates those that are prohibited from disclosing such information, and petitioner is
not one of them.
Second, contrary to petitioner's claim, the rationale behind the prohibition does not extend and apply
to it. To reiterate, covered institutions are precluded from disclosing the reports or the fact they are
reported to petitioner, because it will impede the possible investigation on the covered and suspicious
transactions. Unlike covered institutions, petitioner is mandated to investigate and use the information
it has to institute cases against violators. The international standards that petitioner cites, which
advocate confidentiality of the transaction reports and prohibits their disclosure, only apply to covered
institutions. As the wording of the standards shows, the prohibition avoids "tipping-off" or situations
where covered transactions will warn depositors and possible violators that they are being reported to
the petitioner.
Third, the prohibition and confidentiality provisions cannot apply to petitioner; otherwise, it would
contravene its direct mandate under Section 7 of the Anti-Money Laundering Act.
In addition, the criminal prosecution of anti-money laundering offenses would be unduly hampered if
petitioner were prohibited from disclosing information regarding covered and suspicious transactions.
It would be antithetical to its own functions if petitioner were to refuse to participate in prosecuting
anti-money laundering offenses by taking shelter in the
confidentiality provisions of the Anti-Money Laundering Act.
43. REPUBLIC OF THE PHILIPPINES V. EUGENIO, JR.

G.R. No. 214071, February 15, 2022.
Ponente: CAGUIOA, J.
Student Assigned: BILGERA
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DOCTRINE: An order declaring a claim admitted or not contested under Section 39 of the Rules on
Civil Forfeiture is a final order, as it leaves nothing more to be done except to be executed in favor of the
claimant. Hence, the AMLC should have appealed to the CA instead of filing a petition for certiorari.
Section 35 does not explicitly prohibit the filing of a claimant's verified petition earlier than the finality of
the order of forfeiture. Notably, under the same provision, claimants may already raise their claims before
the order is even issued through participation in the forfeiture proceedings, either by being impleaded or by
intervening therein. The 15-day period to file a verified petition (for those who did not participate in the
forfeiture proceedings) certainly serves some practical purposes, i.e.., to avoid multiplicity of suits and
conflicting decisions in case the defendant in the civil forfeiture case files a motion for reconsideration or
appeal against the order of forfeiture, as well as to serve as a reglementary period beyond which all claims
against the forfeited assets would be barred. However, to equate this period to an absolute prohibition
against early filing — as proposed by the AMLC — seems neither practical nor logical.
FACTS: This case stemmed from a money laundering case filed before the Regional Trial Court (RTC)
by petitioner, represented by the Anti-Money Laundering Council (AMLC), against Conrado Ariola,
Jr. and his conspirators (Ariola, et al.). The AMLC argued before the RTC-Manila that Ariola, et al.
violated Sections 8.1, 26.1, and 26.3 of the Securities Regulation Code by soliciting investments from
the general public without the necessary secondary licenses to do so. The AMLC prayed that the assets
of Ariola, et al. be forfeited in favor of the government.
During the civil forfeiture proceedings before the RTC-Manila, AMLC offered into evidence the
testimonies of Teresita Corpus (Corpus) and Teresita Gomez (Gomez) (collectively, private
respondents). Private respondents testified that Ariola, et al. induced them to invest large amounts of
money with Five Vision Consultancy, Inc. (Five Vision), which was owned by Ariola, et al. They also
filed a related case for collection of sum of money directly against Ariola, et al. before the RTC of Makati
City (RTC-Makati).6 Branch 132 of the RTC-Makati ruled that Corpus and Gomez invested
P4,720,000.00 and P11,799,000.00 in Five Vision, respectively.
Subsequently, the RTC-Manila in the civil forfeiture proceedings granted AMLC's Complaint and
declared Ariola, et al.'s bank accounts forfeited in favor of the government. After receipt of the RTC-
Manila's order of forfeiture, private respondents jointly filed a "Second Verified Petition”. In this Second
Verified Petition, private respondents prayed that a portion of the funds forfeited in favor of the
government be released to them equivalent to the amounts that they were induced to invest in Ariola,
et al.'s fraudulent investment scheme. They also prayed that they be allowed to litigate in forma pauperis,
alleging that they were both jobless and without sufficient means to support their families, let alone to
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pay the filing and docket fees. The RTC-Manila issued an Order, directing the AMLC to file within 15
days its Comment on the Second Verified Petition.
Instead of filing a Comment or Opposition, the AMLC filed a Manifestation and Motion Citing
Sections 3614 and 3715 of the Rules on Civil Forfeiture, the AMLC posited that its deadline to file a
Comment should be suspended until after the RTC-Manila has ruled on the sufficiency in form and
substance of the Second Verified Petition and resolved the motion to litigate in forma pauperis.
The RTC-Manila subsequently issued an order setting for hearing the motion to litigate as pauper
litigants, and nothing but without making any explicit ruling on the AMLC's Manifestation and
Motion.
After a further exchange of pleadings, the RTC-Manila eventually issued an Order (Assailed Order)
granting private respondents' motion for issuance of an order approving an uncontested claim. The
RTC-Manila noted that prior to the Second Verified Petition and while the forfeiture proceedings were
still pending, private respondents filed an earlier "Verified Petition'' which the RTC-Manila ordered
AMLC to comment on in an Order dated July 27, 2006.22 Hence, AMLC had already been given two
opportunities to oppose private respondents' claims, since it was ordered to respond to both the first
and second Verified Petitions. It also pointed out that Section 37 of the Rules on Civil Forfeiture does
not require that a separate order explicitly declaring the petition filed by claimants as sufficient in form
and substance be issued before directing the AMLC to comment thereon. Finally, the RTC-Manila
found it unfair that the AMLC would contest private respondents' claims after using their testimonies
as evidence in its favor during the civil forfeiture proceedings. Upon motion of private respondents, the
RTC-Manila issued an Order23 dated August 17, 2012 correcting the amounts awarded to the two
claimants. Subsequently, the RTC-Manila denied AMLC's motion for reconsideration for lack of
merit.
Consequently, AMLC filed a Petition for Certiorari with the CA assailing the RTC-Manila's Orders.
In its Assailed Decision, the CA ruled that the RTC-Manila did not act with grave abuse of discretion
in issuing its Assailed Order. Interpreting Section 37 of the Rules on Civil Forfeiture, the CA concluded
that it was not necessary for the RTC-Manila to issue a separate Order finding that private respondents'
Second Verified Petition was sufficient in form and substance; its Order directing the AMLC to file a
Comment to the said petition is notice enough that the petition was found acceptable. The AMLC
cannot compel the RTC-Manila to issue an Order which is not required by the Rules on Civil
Forfeiture. According to the CA, the AMLC's Manifestation and Motion should be considered a
motion to extend its time to file a comment, which it is not entitled to as a matter of right. Hence, this
petition.
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Argument of Respondent: For their part, private respondents argue that the AMLC availed of the
wrong remedy when it filed a petition for certiorari before the CA. They point out that the AMLC
should have appealed from the RTC-Manila's Decision pursuant to the Rules on Civil Forfeiture. They
also point out that the AMLC's prematurity argument was raised for the first time before the Court,
and that it is erroneous because Section 35 of the Rules on Civil Forfeiture merely prescribes a deadline
for filing a claim, not a prohibition on filing prior to finality of the order of forfeiture.
ISSUES:
1. Whether the AMLC's resort to the CA through a petition for certiorari was proper. (NO)
2. Whether the AMLC was denied due process by the RTC-Manila. (NO.)
RULING:
1. The court finds that the AMLC should have appealed the RTC’s decision instead of filing a petition
for certiorari.
According to the AMLC, appeal is not available as a remedy if the order or decision to be appealed from
is one that declares a claim uncontested. The AMLC points out that Section 42 (Appeal) follows Section
40 (Hearing on Contested Claim) and Section 41 (Final Order); hence, an appeal can only be filed
against final orders on contested claims after a full-¬blown hearing. It also points out that only an
"aggrieved party" may appeal to the CA under Section 34, and if claims are uncontested, there cannot
be any aggrieved party.
A cursory reading of Title VII and Section 34 of the Rules on Civil Forfeiture as quoted above would
expose the ludicrousness of the AMLC's arguments. Appeal under Section 42 is available as a remedy
for any final orders of the RTC as regards any claims against the forfeited assets. Just because Section 42
sequentially comes after Section 40 (Hearing on Contested Claim) and Section 41 (Final Order) is not
an argument to sever Section 42 from the rest of Title VII. This sequence in provisions could not have
meant to leave parties without a remedy in a case where, for whatever reason, the RTC erroneously
approves an uncontested claim under Section 39.
Sec. 42. Appeal. - An appeal to the Court of Appeals may be taken in the same manner as prescribed in
Section 34 of this Rule.
In relation to Section 42, Section 34 of the Rules on Civil Forfeiture states:
Sec. 34. Appeal. -
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(a) Notice and period of appeal. - An aggrieved party may appeal
the judgment to the Court of Appeals by filing within fifteen days from
its receipt a notice of appeal with the court which rendered the
judgment and serving a copy upon the adverse party.
(b) Procedure on appeal. - The parties shall file, in lieu of briefs,

their respective memoranda within a non-extendible period of thirty
days from receipt of the notice issued by the clerk of court to the parties
that all the evidence, oral and documentary, are attached to the record.
Sec. 39. Disposition of Admitted or Uncontested Claim. - The court may, without hearing, issue
an appropriate order approving any claim admitted or not contested by the petitioner.
An order declaring a claim admitted or not contested under Section 39 of the Rules on Civil Forfeiture
is a final order, as it leaves nothing more to be done except to be executed in favor of the claimant. Hence,
the AMLC should have appealed to the CA instead of filing a petition for certiorari.
However, the CA exercised its discretion to hear the case on its merits despite the procedural misstep.
Indeed, a relaxation of the rules by the CA was warranted. Given that the case involves significant sums
of money which appear to have been fraudulently obtained from unwitting victims of a large-scale
investment scam, a full resolution of the case on the merits was preferable over an outright dismissal on
procedural grounds. The CA had sufficient basis to exercise leniency when it acted on the AMLC's
petition for certiorari.
2. The AMLC was not denied due process; the RTC-Manila could not be faulted for considering private
respondents' claims as uncontested.
The AMLC’s claim of denial of due process is unfounded. A perusal of the records would reveal that it
was given two separate opportunities to contest private respondents' claims, since the RTC-Manila
directed it to file a comment on both the first and Second Verified Petitions. In both instances, the
AMLC failed to file a comment as directed.
The AMLC is also mistaken in expecting that the RTC-Manila should have issued a separate and explicit
order declaring private respondents' petition as sufficient in form and substance. As pointed out by the
CA, Section 35 of the Rules on Civil Forfeiture does not require the RTC to issue such an order. If the
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RTC finds the petition to be sufficient in form and substance, it will simply direct the plaintiff — the
AMLC in this case — to comment thereon.
Granted, by that time, the eligibility of private respondents to litigate as indigents was still in issue,
prompting the AMLC to file its Manifestation and Motion. Nevertheless, when the RTC-Manila
eventually declared private respondents' exempt from paying docket fees on May 23, 2011, the AMLC
did not file a comment, or any other pleading for that matter, whether to clarify the status of their
Manifestation and Motion or to ascertain what period should be followed for the filing of its comment.
When almost five months passed without the AMLC filing any response to their claims, private
respondents finally filed their motion to declare their claims uncontested.1âшphi1
Given these circumstances, the AMLC's claim of denial of due process is easily seen as a bankrupt claim,
and cannot be given credence. The AMLC unreasonably failed to timely contest private respondents'
claims, and the RTC-Manila cannot be faulted for granting the latter's motion. The AMLC lost the
chance to file its comment through its own fault.
Private respondents' Second Verified Petition was not dismissible for being filed early.
There is no merit in the AMLC's argument that the Second Verified Petition was prematurely filed. To
recall, Section 35 of the Rules on Civil Forfeiture provides:
Sec. 35. Notice to File Claims. - Where the court has issued an order of forfeiture of the
monetary instrument or property in a civil forfeiture petition for any money laundering
offense defined under Section 4 of Republic Act No. 9160, as amended, any person
who has not been impleaded nor intervened claiming an interest therein may
apply, by verified petition, for a declaration that the same legitimately belongs to him
and for segregation or exclusion of the monetary instrument or property corresponding
thereto. The verified petition shall be filed with the court which rendered the
order of forfeiture within fifteen days from the date of finality of the order of
forfeiture, in default of which the said order shall be executory and bar all other
claims. (Emphasis supplied)
Section 35 does not explicitly prohibit the filing of a claimant's verified petition earlier than the finality
of the order of forfeiture. Notably, under the same provision, claimants may already raise their claims
before the order is even issued through participation in the forfeiture proceedings, either by being
impleaded or by intervening therein. The 15-day period to file a verified petition (for those who did not
participate in the forfeiture proceedings) certainly serves some practical purposes, i.e.., to avoid
multiplicity of suits and conflicting decisions in case the defendant in the civil forfeiture case files a
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motion for reconsideration or appeal against the order of forfeiture, as well as to serve as a reglementary
period beyond which all claims against the forfeited assets would be barred. However, to equate this
period to an absolute prohibition against early filing — as proposed by the AMLC — seems neither
practical nor logical.
Section 35 does not support AMLC's argument that the RTC-Manila should have dismissed the Second
Verified Petition for lack of jurisdiction. If indeed a claimant files his or her verified petition before the
15-day period commences, the trial court may simply hold the verified petition in abeyance and defer
any action thereon until after the order of forfeiture becomes final and executory. In other words, the
15-day period prescribed by Section 35 should not be read in a way that will unduly impair a claimant's
chance to assert his or her claim against the forfeited assets. This is especially true in this case where both
the RTC-Manila and the AMLC were already aware of private respondents' claims even while the
forfeiture proceedings were still pending because their testimonies were used by the AMLC to further
its own case.
44. REPUBLIC V. NG
G.R. No. 239047, June 16, 2021.
Ponente: INTING, J.
DOCTRINE: It is clear from Section 12 of A.M. No. 05-11-04-SC that after the issuance of the PAPO,
the burden is shifted to the respondent who "may for good cause show why the provisional asset
preservation order should be lifted." It is imperative upon the respondent to prove that the monetary
instrument, property or proceeds subject of the petition are not related to an unlawful activity as defined
in Section 3(i)59 of RA 9160, as amended by RA 9194.
FACTS:
The case involves a Petition for Review on Certiorari filed by the Republic of the Philippines,
represented by the Anti-Money Laundering Council (AMLC), against Juan T. Ng and Metropolitan
Bank and Trust Company (Metrobank). The case revolves around allegations of illegal business
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practices, money laundering, and the diversion of government funds by Janet Lim Napoles and her
associates.
The case is based on the statements and testimonies of Benhur K. Luy, Merlina Pablo Suñas, and other
employees of JLN Group of Companies, owned by Janet Lim Napoles. These statements allege that
JLN Corporation established non-governmental organizations (NGOs) to illegally funnel government
funds, which were then remitted to Napoles' personal bank accounts. The National Bureau of
Investigation (NBI) and the Office of the Ombudsman requested the assistance of the AMLC in
investigating the financial transactions of Napoles and Luy. The AMLC conducted a bank inquiry and
found significant transfers from Senator Estrada's accounts to Ng's account, which prompted the
Republic to file a Petition for Civil Forfeiture against Ng.
The RTC initially issued a Provisional Asset Preservation Order (PAPO) against Ng's account based on
probable cause that it may be related to unlawful activities. However, the RTC later denied the
Republic's prayer for the issuance of an Asset Preservation Order (APO) and granted Ng's motion to
lift/discharge the PAPO. The RTC ruled that there was no clear and convincing explanation from the
Republic on how the funds were credited to Ng's account and that Ng was not aware that the money
he received from Napoles were proceeds of the PDAF scam.
The CA affirmed the RTC's decision and dissolved the Writ of Preliminary Injunction issued in favor
of the Republic. The CA ruled that the Republic failed to establish a clear connection between Ng's
account and the pork barrel scam.
ISSUE: Whether Ng discharged the burden of showing why an APO should not be issued against
Metrobank Account. (NO.)
RULING: The Court agrees with the Republic that the RTC's decision did not conform with the
evidence on record. The Court finds that Ng's explanation for the deposits in his account, without any
supporting documents, is insufficient to lift the PAPO. To the Court, Ng's mere allegation that Napoles
was just an acquaintance with whom he had no business transactions, but to whom he extended loans
on several occasions by way of accommodation because of their Chinese heritage, tradition, and culture
does not satisfy the good cause required under Section 12 of A.M. No. 05-11-04-SC in order for the
PAPO to be lifted. It is thus too early, at the stage of determining whether the APO should issue, to
make a conclusion that the AMLC was not able to prove that the transactions were made within the
period of the PDAF scam. In addition, the deposits made by Napoles and the NGOs are not the only
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basis presented by the AMLC. The subject account also received money from Senator Estrada's bank
account that is also under investigation.To be clear, the issuance of a PAPO or an APO is only to secure
the funds contained in the subject account which, at the time of the issuance of the PAPO, had a frozen
balance of P962,286.27. The amount is minuscule considering the money involved in the PDAF scam.
The civil foreclosure will still proceed where the parties will be given opportunities to present more
evidence to prove their respective claims. The Court also takes into account the AMLC's argument that
the subject account is not the only account of Ng that received transfers from Napoles and JLN
Corporation, but the subject account is the only remaining open account since the others were already
closed.
45. BEACON CURRENCY EXCHANGE, INC V. REPUBLIC OF THE PHILIPPINES

G.R. No. 255099. March 18, 2021.
Student Assigned: CARIAS
DOCTRINE: Section 10 of R.A. 9160, as amended, provides clearly that the freeze order shall be ipso
facto lifted if there is no case filed against a person whose account was frozen within the period determined
by the CA, but not exceeding 6 months. In other words, the freeze order is not permanent and it is
timebound.
FACTS: The PNP Drug Enforcement Unit conducted a buy-bust operation which led to the arrest of
Charlie Fortuna. In addition to the shabu in his possession, the PNP found deposit slips indicating that
he was remitting the proceeds of his drug trafficking to several accounts including a deposit of P3M to
a BDO account belonging to Beacon Currency Exchange. The PNP also discovered that despite the
absence of financial means, Fortuna owned a house and lot in one of the wealthier subdivisions in
Mandaue City. The police requested AMLC to conduct a financial investigation on Fortuna. The
AMLC found that the BDO account was subject to a pending civil forfeiture case involving a drug-
related activity. The AMLC found probable cause that the subject bank account is related to money
laundering. The CA issued a Freeze Order for a period of 20 days on the BDO account belonging to
Beacon. Beacon filed a motion to lift the Freeze Order. AMLC through the OSG filed an application
for the extension of the freeze order. The OSG alleged that the case is of a complex nature requiring
deeper financial examination which cannot be completed in less than 6 months. Beacon denied
involvement in the illegal drugs activity and claimed that the flagged P3M is payment for the purchase
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of US Dollars. The CA extended the effectivity of the freeze order to 6 months on the BDO account.
Beacon now files the present petition praying that the freeze order on its BDO account be lifted.
ISSUE: Whether the freeze order on the BDO account of Beacon should be lifted. (YES.)
RULING: The case is now moot. The Freeze Order was first issued by the CA on September 3, 2020
and extended for a period of six months or until March 2, 2021 with respect to the alleged P3,000,000.00
deposit by Fortuna in Beacon's BDO Account. A freeze order is merely an interim relief and pre-emptive
in character, such that the monetary instruments or property that are in any way related to an unlawful
activity or money laundering are temporarily preserved by preventing the owner from utilizing them
during the duration of the freeze order.
Moreover, Section 10 of R.A. 9160, as amended, provides clearly that the freeze order shall be ipso facto
lifted if there is no case filed against a person whose account was frozen within the period determined
by the CA, but not exceeding 6 months. In other words, the freeze order is not permanent and it is time
bound. Therefore, the Court no longer has the authority to act on Beacon's petition praying for the
lifting of the Freeze Order.
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1. SMITH KLINE BECKMAN CORPORATION VS COURT OF APPEALS
GR No. 126627, Aug. 14, 2003
Ponente: CARPIO MORALES, J.
Student Assigned: RENTUTAR
Topic under the Syllabus: Patent
DOCTRINE: The doctrine of equivalents provides that an infringement also takes place when a device
appropriates a prior invention by incorporating its innovative concept and, although with some
modification and change, performs substantially the same function in substantially the same way to
achieve substantially the same result.
FACTS: Petitioner filed on, as assignee, before the Philippine Patent Office an application for patent
over an invention entitled "Methods and Compositions for Producing Biphasic Parasiticide Activity
Using Methyl 5 Propylthio-2-Benzimidazole Carbamate." A Letters Patent for the aforesaid invention
was issued to petitioner for a term of 17 years. Private Respondent is a domestic corporation that
manufactures, distributes and sells veterinary products including Impregon, a drug that has Albendazole
for its active ingredient and is claimed to be effective against gastro-intestinal roundworms, lungworms,
tapeworms and fluke infestation in carabaos, cattle and goats. Petitioner sued private respondent for
infringement of patent and unfair competition before the RTC. It claimed that its patent covers or
includes the substance Albendazole.
ISSUE: Whether the private respondent committed patent infringement. (NO)
RULING: The Supreme Court held that from a reading of the claims of Letters Patent No. 14561 in
relation to the other portions thereof, no mention is made of the compound Albendazole. When the
language of its claims is clear and distinct, the patentee is bound thereby and may not claim anything
beyond them. And so are the courts bound which may not add to or detract from the claims matters
expressed or necessarily implied, nor may they enlarge the patent beyond the scope of that which the
inventor claimed and the patent office allowed, even if the patentee may have been entitled to something
more than the words it had
chosen would include. It bears stressing that the mere absence of the word Albendazole in Letters Patent
No. 14561 is not determinative of Albendazole’s non-inclusion in the claims of the patent. While
Albendazole is admittedly a chemical compound that exists by a name different from that covered in
petitioner’s letters patent, the language of Letter Patent No. 14561 fails to yield anything at all regarding
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Albendazole. And no extrinsic evidence had been adduced to prove that Albendazole inheres in
petitioner’s patent in spite of its omission therefrom or that the meaning of the claims of the patent
embraces the same. The application of the Doctrine of Equivalents will not save the claims of the
Petitioner. The doctrine of equivalents provides that an infringement also takes place when a device
achieve substantially the same result. Yet again, a scrutiny of petitioner’s evidence fails to convince this
Court of the substantial sameness of petitioner’s patented compound and Albendazole. While both
compounds have the effect of neutralizing parasites in animals, identity of result does not amount to
infringement of patent unless Albendazole operates in substantially the same way or by substantially the
same means as the patented compound, even though it performs the same function and achieves the
same result. In other words, the principle or mode of operation must be the same or substantially the
same. The doctrine of equivalents thus requires satisfaction of the function-means-and-result test, the
patentee having the burden to show that all three components of such equivalency test are met.
2. CRESER PRECISION SYSTEM INC. VS. CA

GR No. 118708, Feb. 2, 1998
Ponente: AUSTRIA-MARTINEZ, J.
Student Assigned: MILA
DOCTRINE: The phrase "anyone possessing any right, title or interest in and to the patented invention"
upon which petitioner maintains its present suit, refers only to the patentee's successors-in-interest, assignees
or grantees since actions for infringement of patent may be brought in the name of the person or persons
interested, whether as patentee, assignees, or as grantees, of the exclusive right.
FACTS: Private respondent, Floro International Corp., is a domestic corporation engaged in the
manufacture, production, distribution and sale of military armaments, munitions, air munitions and
other similar materials.
On January 23, 1990, private respondent was granted by the Bureau of Patents, Trademarks and
Technology Transfer (BPTTT), a Letters Patent covering an aerial fuze.
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Sometime in November 1993, private respondent discovered that petitioner, Creser Precision System
Inc., submitted samples of its patented aerial fuze to the Armed Forces of the Philippines (AFP) for
testing. It learned that petitioner was claiming the aforesaid aerial fuze as its own and planning to bid
and manufacture the same commercially without license or authority from private respondent. To
protect its right, private respondent sent a letter to petitioner advising it of its existing patent and its
rights thereunder, warning petitioner of a possible court action and/or application for injunction,
should it proceed with the scheduled testing by the military.
In response to the private respondent's demand, petitioner filed a complaint for injunction and damages
arising from the alleged infringement. The complaint alleged, among others: that petitioner is the first,
true and actual inventor of an aerial fuze which it developed as early as December 1981 under the Self-
Reliance Defense Posture Program (SRDP) of the AFP; that sometime in 1986, petitioner began
supplying the AFP with the said aerial fuze; that private respondent's aerial fuze is identical in every
respect to the petitioner's fuze; and that the only difference between the two fuzes are miniscule and
merely cosmetic in nature.
Private respondent countered alleging that petitioner has no cause of action to file a complaint for
infringement against it since it has no patent for the aerial fuze which it claims to have invented; that
petitioner's available remedy is to file a petition for cancellation of patent before the Bureau of Patents;
that private respondent as the patent holder cannot be stripped of its property right over the patented
aerial fuze consisting of the exclusive right to manufacture, use and sell the same and that it stands to
suffer irreparable damage and injury if it is enjoined from the exercise of its property rights over its
patent.
Moreover, it is the petitioner's contention that it can file, under Section 42 of the Patent Law (R.A.
165), an action for infringement not as a patentee but as an entity in possession of a right, title or interest
in and to the patented invention. It advances the theory that while the absence of a patent may prevent
one from lawfully suing another for infringement of said patent, such absence does not bar the first true
and actual inventor of the patented invention from suing another who was granted a patent in a suit for
declaratory or injunctive relief.
ISSUE: Whether petitioner may validly file an action for infringement against private respondent.
(NO.)
RULING: The court finds the argument of the petitioner untenable. Under RA 165 otherwise known
as the Patent Law, only the patentee or his successors-in-interest may file an action for infringement.
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The phrase "anyone possessing any right, title or interest in and to the patented invention" upon which
petitioner maintains its present suit, refers only to the patentee's successors-in-interest, assignees or
grantees since actions for infringement of patent may be brought in the name of the person or persons
interested, whether as patentee, assignees, or as grantees, of the exclusive right.
Moreover, there can be no infringement of a patent until a patent has been issued, since whatever right
one has to the invention covered by the patent arises alone from the grant of patent. In short, a person
or entity who has not been granted letters patent over an invention and has not acquired any light or
title thereto either as assignee or as licensee, has no cause of action for infringement because the right to
maintain an infringement suit depends on the existence of the patent.
3. E.I. DUPONT DE NEMOURS AND CO. ET. AL. VS. DIR. EMMA FRANCISCO ET. AL.
G.R. No. 174379, Aug. 31, 2016
Ponente: LEONEN, J.
Student Assigned: ALUMNO
DOCTRINE: A patent is granted to provide rights and protection to the inventor after an invention is
disclosed to the public. It also seeks to restrain and prevent unauthorized persons from unjustly profiting
from a protected invention. However, ideas not covered by a patent are free for the public to use and exploit.
Thus, there are procedural rules on the application and grant of patents established to protect against any
infringement. To balance the public interests involved, failure to comply with strict procedural rules will
result in the failure to obtain a patent.
FACTS: E.I. Dupont Nemours and Company (E.I. Dupont Nemours) is an American corporation
organized under the laws of the State of Delaware. It is the assignee of inventors David John Carini, John
Jonas Vytautas Duncia, and Pancras Chor Bun Wong, all citizens of the United States of America.
On July 10, 1987, E.I. Dupont Nemours filed Philippine Patent Application No. 35526 before the
Bureau of Patents, Trademarks, and Technology Transfer. The application was for Angiotensin II
Receptor Blocking Imidazole (losartan), an invention related to the treatment of hypertension and
congestive heart failure.
The product was produced and marketed by Merck, Sharpe, and Dohme Corporation (Merck), E.I.
Dupont Nemours' licensee, under the brand names Cozaar and Hyzaar.
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The patent application was handled by Atty. Nicanor D. Mapili (Atty. Mapili), a local resident agent
who handled a majority of E.I. Dupont Nemours' patent applications in the Philippines from 1972 to
1996.
On December 19, 2000, E.I. Dupont Nemours' new counsel, Ortega, Del Castillo, Bacorro, Odulio,
Calma, and Carbonell, sent the Intellectual Property Office a letter requesting that an office action be
issued on Philippine Patent Application No. 35526.
The Intellectual Property Office denied the revival of the patent application. Petitioner filed before the
Court of Appeals a Petition for Review seeking to set aside the Intellectual Property Office.
On August 31, 2004, the Court of Appeals granted the Petition for Review. In the interim,
Therapharma, Inc. moved for leave to intervene and admit the Attached Motion for Reconsideration
and argued that the Court of Appeals' August 31, 2004 Decision directly affects its vested rights to sell
its own product.
Therapharma, Inc. alleged that on January 4, 2003, it filed before the Bureau of Food and Drugs its
own application for a losartan product "Lifezar," a medication for hypertension, which the Bureau
granted.
It argued that it made a search of existing patent applications for similar products before its application,
and that no existing patent registration was found since E.I. Dupont Nemours' application for its
losartan product was considered abandoned by the Bureau of Patents, Trademarks, and Technology
Transfer. It alleged that sometime in 2003 to 2004, there was an exchange of correspondence between
Therapharma, Inc. and Merck. In this exchange, Merck informed Therapharma, Inc. that it was
pursuing a patent on the losartan products in the Philippines and that it would pursue any legal action
necessary to protect its product. On August 30, 2006, Court of Appeals issued the Resolution granting
the Motion· for Leave to Intervene. In resolving the motion for reconsideration, the CA issued an
amended decision denying the revival of the patent application of the petitioner.
On October 19, 2006, petitioner filed the present case. Petitioner argues that it was not negligent in the
prosecution of its patent application since it was Atty. Mapili or his heirs who failed to inform it of
crucial developments with regard to its patent application. It argues that as a client in a foreign country,
it does not have immediate supervision over its local counsel so it should not be bound by its counsel’s
negligence.
133
ISSUES:
1. Whether the patent application of Losartan by Dupont should be revived and whether or not
the CA correctly denied the revival of the patent application by the petitioner. (NO.)
2. Whether the petitioner’s right of priority as a result of its earlier patent application in the US
removed its invention from being part of the public domain in the Philippines. (NO.)
RULING:
1. The patent application of Losartan by Dupont should not be revived; the Court of Appeals
correctly denied the revival of the patent application by the petitioner.
Under Chapter VII, Section 111(a) of the 1962 Revised Rules of Practice, a patent application
is deemed abandoned if the applicant fails to prosecute the application within four months from
the date of the mailing of the notice of the last action by the Bureau of Patents, Trademarks, and
Technology Transfer, and not from applicant's actual notice.
According to the records of the Bureau of Patents, Trademarks, an Technology Transfer

Chemical Examining Division, petitioner filed Philippine Patent Application No. 35526 on
July 10, 1987. It was assigned to an examiner on June 7, 1988. An Office Action was mailed to
petitioner's agent, Atty. Mapili, on July 19, 1988 because the petitioner failed to respond within
the allowable period, the application was deemed abandoned on September 20, 1988. Under
Section 113, petitioner had until January 20, 1989 to file for a revival of the patent application.
Its Petition for Revival, however, was filed on May 30, 2002, which is 13 years after the date of
abandonment.
Section 113 has since been superseded by Section 133.4 of the Intellectual Property Code, Rule
930 of the Rules and Regulations on Inventions, and Rule 929 of the Revised Implementing
Rules and Regulations for Patents, Utility Models and Industrial Design. The period of 4
months from the date of abandonment, however, remains unchanged.
The Intellectual Property Code even provides for a shorter period of months within which to
file for revival.
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The rules do not provide any exception that could extend this four-month period to 13 years.
Petitioner's patent application, therefore, should not be revived since it was filed beyond the
allowable period.
Even assuming that the four-month period could be extended, petitioner was inexcusably
negligent in the prosecution of its patent application.
Negligence is inexcusable if its commission could have been avoided through ordinary diligence
and prudence. It is also settled that negligence of counsel binds the client as this "ensures against
the resulting uncertainty and tentativeness of proceedings if clients were allowed to merely
disown their counsels' conduct."
Petitioner tries to disown Atty. Mapili's conduct by arguing that it was not informed of the
abandonment of its patent application or of Atty. Mapili's death. By its own evidence, however,
petitioner requested a status update from Atty. Mapili only on July 18, 1995, 8 years after the
filing of its application. It alleged that it only found out about Atty. Mapili's death sometime in
March 1996, as a result of its senior patent attorney's visit to the Philippines.
Even if Atty. Mapili's death prevented the petitioner from submitting a petition for revival on
time, it was clearly negligent when it subsequently failed to immediately apprise itself of the
status of its patent application.
2. Under Section 31 of the Intellectual Property Code, a right of priority is given to any patent
applicant who has previously applied for a patent in a country that grants the same privilege to
Filipinos.
A patent applicant with the right of priority is given preference in the grant of a patent when
there are two or more applicants for the same invention as provided for in Section 29 of the
Intellectual Property Code.
Since both the United States and the Philippines are signatories to the Paris Convention for the
Protection of Industrial Property, an applicant who has filed a patent application in the United
States may have a right of priority over the same invention in a patent application in the
Philippines.
135
However, this right of priority does not immediately entitle a patent applicant the grant of a
patent. A right of priority is not equivalent to a patent. Otherwise, a patent holder of any
member-state of the Paris Convention need not apply for patents in other countries where it
wishes to exercise its patent. It was, therefore, inaccurate for the petitioner to argue that its prior
patent application in the United States removed the invention from the public domain in the
Philippines. This argument is only relevant if respondent Therapharma, Inc. had a conflicting
patent application with the Intellectual Property Office. A right of priority has no bearing in a
case for revival of an abandoned patent application.
The grant of a patent is to provide protection to any inventor from any patent infringement.
Once an invention is disclosed to the public, only the patent holder has the exclusive right to
manufacture, utilize, and market the invention.
The grant of a patent provides protection to the patent holder from the indiscriminate use of
the invention. However, its mandatory publication also has the correlative effect of bringing
new ideas into the public consciousness. After the publication of the patent, any person may
examine the invention and develop it into something further than what the original patent
holder may have envisioned. After the lapse of 20 years, the invention becomes part of the public
domain and is free for the public to use.
In addition, a patent holder of inventions relating to food or medicine does not enjoy absolute
monopoly over the patent. Both Republic Act No. 165 and the Intellectual Property Code
provide for compulsory licensing. Compulsory licensing is defined in the Intellectual Property
Code as the "grant a license to exploit a patented invention, even without the agreement of the
patent owner."
Under Republic Act No. 165, a compulsory license may be granted to any applicant 3 years after
the grant of a patent if the invention relates to food or medicine necessary for public health or
safety.
The patent holder's proprietary right over the patent only lasts for 3 years from the grant of the
patent, after which any person may be allowed to manufacture, use, or sell the invention subject
to the payment of royalties.
4. PHILLIPS SEAFOOD PHILIPPINES CORPORATION V.TUNA PROCESSOR, INC.

G.R. No. 214148, Feb. 6, 2023
Ponente: LOPEZ, J.
136
DOCTRINE: A patentable invention includes any technical solution to a problem in any field of human
activity which is new, involves an inventive step, and is industrially applicable. It may be a product, process,
or an improvement of an existing product or process.
In the Philippines, a patent application must contain:

1. A duly accomplished request for the grant of patent;
2. A description of the invention;
3. A drawings necessary for the understanding of the invention;
4. One or more claims; and
5. An abstract.
Once granted, the patent confers on its owner the exclusive right to restrain, prohibit and prevent any
unauthorized person or entity from making, using, offering the sale, selling, or importing the patented
product or product obtained directly or indirectly from a patented process or the unauthorized use of a
patented process.
2. Determining the existence of infringement requires a two-step analysis;

1. The court interprets the claims to determine the patents scope and meaning;
2. The court measures the allegedly- infringing product or process against the standard of the properly
interpreted claims.
FACTS: Phillips is a domestic corporation engaged in processing fresh tuna and other seafood
products. Tuna Processors, is a foreign corporation organized and existing under the laws of the State
of California, USA. TPI is the successor- in- interest of Kanemitsu Yamaoka.
Yamaoka filed an administrative complaint for patent infringement and preliminary injunction with
prayer for the issuance of a temporary restraining order against Phillips before the intellectual property
offices bureau of legal affairs.
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Yamaoka stated in his complaint that he is one of the patentees of the Philippine patent entitled
“METHOD FOR CURING FISH MEAT BY EXTRA LOW TEMPERATURE SMOKING. The
independent claim of the patent provides that the invention covers the process of curing tuna meat by
exposing it to a filtered smoke cooled in a cooling unit of 0 and 5 degrees C while retaining ingredients
exerting highly preservative and sterilizing effects.
Yamaoka has been using the patent process through Yamaoka Nippon Corporation in Gen. San. since
1994. Then, Pecarich Manufacturing Corporation succeeded YNC. Yamaoka claimed that in 2001,
Phillips hired Pescarich’s former employee, Bong Alvarado to construct 2 smoke machines. Thereupon,
Phillips has been using their patented process in curing its tuna products.
Phillips denied infringing the said patent. It alleged that its process does not require a cooling unit
because the filtered smoke is only allowed to cool to ambient temperature before it is injected directly
into the tuna meat. Also raised the invalidity of the patent.
ISSUANCE OF TRO AND WPI:

Yamaoka presented his first witness. Testified the existence of the cooling unit. The BLA conducted an
ocular inspection in Phillips plant and did not find the cooling unit. Nonetheless BLA issued TRO
against Phillips. Phillips moved to reconsider, but the BLA denied. BLA made a preliminary finding that
Phillips process and patent achieve the same function and give the same result. The elements of
respondents’ process achieve the same function and give the same result. BLA also issued a WPI directing
Phillips to cease and desist from using the patent process on its tuna for 90 days. Phillips filed an MR
which was denied.
BLA DECISION:
Yamaoka’s complaint for patent infringement and held that Phillips' process does not fall within the
scope of the said patent. There is no literal infringement because Phillips' process does not include every
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element of Claims 1 and 2 of the patent. There is no infringement under the doctrine of equivalents
because Phillips' process does not meet the function-means- and- result test. Phillips' process does not
perform substantially the same function or operate in substantially the same way as what is in the said
patent. For this reason, the two processes cannot achieve substantially the same result.
APPEAL TO ODG:
Yamaoka appealed to the Office of the Director General. Argued that the claims of his patent could be
read literally from Phillips' process. Also, the combination of the steps in his patent claims is equivalent
to Phillips' process. ODG decided to call on Prof. Acevedo, a technical expert from the Dept. of Food
and Science and Nutrition, instead of forming a panel expert. Acevedo found that the food products of
Phillips and the patent are different because the meat undergoes distinctly different curing processes.
Note the differences in the filtration process, the temperature of the filtered smoke, and the manner of
introducing the filtered smoke into the tuna meat.
Yamaoka died, he was substituted by TPI in the proceedings. ODG dismissed Yamaoka’s appeal. Found
that no cogent reason to reverse and set aside BLA’s decision.
ODG observed that Phillips process does not require a cooling unit to cool the produced smoke to
between 0 and 5 degrees C, and smoking the tuna meat by exposing it to the smoke cooled to between
0 and 5 degrees C. Therefore, Phillips does not literally infringed the patent. Yamaoka failed to satisfy
the function- means- result test to justify his infringement claim under the doctrine of equivalents.
DIRECTOR’S OBSERVATION:
1. In the second step of Claim 1 or the filtering step, it can thus be clearly concluded that the
filtering step of the respondents process operates in a very different way producing a
substantially different result or product of an odorless and tasteless smoke
2. In the 3rd step of claim 1 or the cooling of filtered smoke. There are substantially different
temperatures employed by the two processes in the cooling of the filtered smoke.
3. The curing step in both processes are different
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TPI elevated the case to the CA.
CA DECISION:
Dismissed TPI’s appeal. The pre-cooling of the filtered smoke at a certain temperature is markedly
absent in the respondent’s process.
TPI sought reconsideration.
AMENDED CA DECISION:
After a review of the parties arguments, it ruled that there is infringement under the doctrine of
equivalents because both processes involve the burning of combustible material to produce smoke,
filtration of the smoke, cooling of filtered smoke before curing, and curing tuna meat with cold filtered
smoke. However, under the doctrine of equivalents, infringement also takes place when a device
achieve substantially the sale result. Therefore, Phillips is liable for patent infringement under the
doctrine of equivalents.
PARTIES ARGUMENTS:
1. CA erred in finding that it infringed the patent under the doctrine of equivalent;
2. CA misconstrued the phrase to remove mainly tar therefrom;
3. There is insufficient to support the finding of infringement under the doctrine of equivalents;
4. TPI failed to show that the products of the two processes are substantially the same.
ISSUE:
1. Whether the CA’s interpretation of the phrase to remove mainly tar therefrom in claim 1 is
proper. (YES).
2. Whether Phillips' process infringes the said patent. (NO.)
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RULING: CA correctly interpreted the phrase to remove mainly tar therefrom, but the interpretation
is insufficient to support TPI’s patent infringement claim.
A patentable invention includes any technical solution to a problem in any field of human activity which
is new, involves an inventive step, and is industrially applicable. It may be a product, process, or an
improvement of an existing product or process.
In the Philippines, a patent application must contain:

1. A duly accomplished request for the grant of patent;
2. A description of the invention;
3. A drawings necessary for the understanding of the invention;
4. One or more claims; and
5. An abstract.
Once granted, the patent confers on its owner the exclusive right to restrain, prohibit and prevent any
unauthorized person or entity from making, using, offering the sale, selling, or importing the patented
product or product obtained directly or indirectly from a patented process or the unauthorized use of a
patented process.
2. Determining the existence of infringement requires a two-step analysis;

1. The court interprets the claims to determine the patents scope and meaning
2. The court measures the allegedly- infringing product or process against the standard of the
properly interpreted claims.
a. THERE IS NO LITERAL INFRINGEMENT

The elements of cooling the filtered smoke to 0 and 5 degrees C in a cooling unit before applying
it to the tuna meat are absent. Phillips' process does not fall within the literal meaning of the patent
claim 1.
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b. THERE IS NO INFRINGEMENT UNDER THE DOCTRINE OF EQUIVALENTS
TPI failed to establish that the simultaneous cooling of the filtered smoke and tuna meat will cure
tuna meat in substantially the same way as the pre-cooled filtered smoke. The eventual cooling of
the filtered smoke in Phillips process does not ipso facto indicate similarities in the effect of the
smoke on tuna meat. All the elements test was not satisfied
TPI and its predecessors-in-interest failed to discharge their burden of proving that Phillips appropriated
the innovative concept of the patent. The evidence on record is insufficient to establish that Phillips
process cures the tuna meat in substantially the same way as the said patent. Petition for certiorari is
granted.
5. W LAND HOLDINGS, INC. vs STARWOOD HOTELS AND RESORTS WORLDWIDE,

INC.
G.R. No. 222366, December 4, 2017
Ponente: PERLAS-BERNABE, J.
Student Assigned: OMAR
Topic under the Syllabus: Trademark
DOCTRINE: Section 124.2 of the IP Code requires the registrant or owner of a registered mark to declare
“actual use of the mark” (DAU) and present evidence of such use within the prescribed period. The use
which is required to maintain registration must be genuine, that is, a bona fide use which results or tends
to result into a commercial interaction or transaction “in the ordinary course of trade”. Such use by means
of an interactive website may constitute proof of actual use that is sufficient to maintain registration of the
same.
FACTS: In 2005, Starwood filed before the IPO an application for registration of the trademark "W".
In 2007, Starwood's application was granted and thus, the "W" mark was registered in its name.
However, in 2006, W Land applied for the registration of its own " W" mark, which thereby prompted
Starwood to oppose the same.
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In 2008, the BLA found merit in Starwood's opposition, and ruled that W Land's "W" mark is
confusingly similar with Starwood's mark, which had an earlier filing date. W Land filed a motion for
reconsideration in 2008, which was denied by the BLA in a Resolution.
W Land then filed a Petition for Cancellation of Starwood's mark for non-use under Section 151.1 of IP
Code, claiming that Starwood has failed to use its mark in the Philippines because it has no hotel or
establishment in the Philippines rendering the services covered by its registration; and that Starwood's
"W” mark application and registration barred its own "W” mark application and registration for use on
real estate.
In this relation, Starwood argued that it conducts hotel and leisure business both directly and indirectly
through subsidiaries and franchisees, and operates interactive websites for its W Hotels in order to
accommodate its potential clients worldwide.
The BLA ruled in favor of W Lands and accordingly ordered the cancellation of Starwood's registration
for the "W" mark for not proving actual use of the "W" mark in the Philippines.
Starwood then appealed to the IPO DG. IPO DG reversed the decision and denied cancellation.
So, W Land filed a petition for review before the CA. The CA affirmed the IPO DG ruling.
ISSUE: Whether the Court of Appeals correctly affirmed the Intellectual Property Office Director
General's dismissal of W Land's petition for cancellation of Starwood's "W" mark. (YES.)
RULING: The Court ruled in favor of Starwood and affirmed the Court of Appeals' decision.
The use of a registered mark through an interactive website may constitute proof of actual use sufficient
to maintain the registration of the mark.
The internet has become a powerful tool for businesses to reach consumers, and interactive websites
allow for commercial transactions to take place.
The use of the mark on the website must result in a commercial interaction or transaction in the ordinary
course of trade.
143
Starwood's use of the "W" mark through its interactive website, which allowed Philippine residents to
make reservations and bookings, constituted actual use in the Philippines.
Starwood had submitted a Declaration of Actual Use (DAU) with evidence of use, which had been
accepted by the IPO.
The Court deferred to the expertise of the IPO in trademark matters and found no reason to disturb
their recognition of Starwood's use of the mark.
Therefore, the Court held that Starwood's use of the "W" mark through its interactive website
constituted actual use in the Philippines, thereby maintaining the registration of the mark.
6. UFC PHILS. INC. ET AL VS. FIESTA BARRIO MFG. CORP.

G.R. No. 198889, Jan. 20, 2016.
Ponente: LEONARDO-DE CASTRO, J.
Student Assigned: DELGADO
DOCTRINE: Under the Dominancy Test, the dominant features of the competing marks are considered
in determining whether these competing marks are confusingly similar. Greater weight is given to the
similarity of the appearance of the products arising from the adoption of the dominant features of the
registered mark, disregarding minor differences. The visual, aural, connotative, and overall comparisons
and impressions engendered by the marks in controversy as they are encountered in the realities of the
marketplace are the main considerations.
FACTS: Petitioner Nutri-Asia, Inc. (petitioner) is a corporation duly organized and existing under
Philippine laws. It is the emergent entity in a merger with UFC Philippines, Inc. that was completed on
February 11, 2009. Respondent Barrio Fiesta Manufacturing Corporation (respondent) is likewise a
corporation organized and existing under Philippine laws.
Respondent filed an application for the trademark “PAPA BOY & DEVICE” for goods under Class 30,
specifically for “lechon sauce.” Petitioner filed with the IPO-BLA a Verified Notice of Opposition to
the above-mentioned application alleging that the mark “PAPA” is for use on banana catsup and other
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similar goods was first used [in] 1954 by Neri Papa, and thus, was taken from his surname. After using
the mark “PAPA” for about twenty-seven (27) years, Neri Papa subsequently assigned the mark
“PAPA” to Hernan D. Reyes who, on September 17, 1981, filed an application to register said mark
“PAPA” for use on banana catsup, chili sauce, achara, banana chips, and instant ube powder.
On November 7, 2006, the registration was assigned to Nutri-Asia. The company has not abandoned
the use of the mark “PAPA” and the variations thereof as it has continued their use up to the present.
Petitioner further allege that the mark “PAPA BOY & DEVICE” is identical to the mark “PAPA”
owned by Opposer and duly registered in its favor, particularly the dominant feature thereof. With the
dominant feature of respondent-applicant’s mark “PAPA BOY & DEVICE”, which is Petitioner’s
“PAPA” and the variations thereof, confusion and deception is likely to result. The consuming public,
particularly the unwary customers, will be deceived, confused, and mistaken into believing that
respondent-applicants goods come from Nutri-Asia, which is particularly true since Southeast Asia
Food Inc., sister company of Nutri-Asia, have been major manufacturers and distributors of lechon
sauce since 1965 under the registered trademark “Mang Tomas”.
The IPO-BLA rendered a Decision rejecting respondent’s application for “PAPA BOY & DEVICE.”
Respondent filed an appeal before the IPO Director General but was denied. The CA, however, reversed
the decision of the IPO-BLA and ruled to grant the application.
ISSUE: Whether or not by using the “dominant feature” of Nutri-Asia’s “PAPA” mark for “PAPA
BOY & DEVICE” would constitute trademark infringement. (YES.)
RULING: In Dermaline, Inc. v. Myra Pharmaceuticals, Inc., we defined a trademark as “any distinctive
word, name, symbol, emblem, sign, or device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those manufactured,
sold, or dealt by others.” We held that a trademark is “an intellectual property deserving protection by
law.”
In this case, the findings of fact of the highly technical agency, the Intellectual Property Office, which
has the expertise in this field, should have been given great weight by the Court of Appeals.
Again, this Court discussed the dominancy test and confusion of business in Dermaline, Inc. v. Myra
Pharmaceuticals, Inc.,48 and we quote:
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The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks
that might cause confusion or deception. It is applied when the trademark sought to be registered
contains the main, essential and dominant features of the earlier registered trademark, and confusion or
deception is likely to result. Duplication or imitation is not even required; neither is it necessary that the
label of the applied mark for registration should suggest an effort to imitate. The important issue is
whether the use of the marks involved would likely cause confusion or mistake in the mind of or deceive
the ordinary purchaser, or one who is accustomed to buy, and therefore to some extent familiar with,
the goods in question. Given greater consideration are the aural and visual impressions created by the
marks in the public mind, giving little weight to factors like prices, quality, sales outlets, and market
segments. The test of dominancy is now explicitly incorporated into law in Section 155.1 of R.A. No.
8293 which provides —
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a

registered mark or the same container or a dominant feature thereof in connection with the sale,
offering for sale, distribution, advertising of any goods or services including other preparatory
steps necessary to carry out the sale of any goods or services on or in connection with which such
use is likely to cause confusion, or to cause mistake, or to deceive x x x.
A scrutiny of petitioner’s and respondent’s respective marks would show that the IPO-BLA and the
IPO Director General correctly found the word “PAPA” as the dominant feature of petitioner’s mark
“PAPA KETSARAP.” Contrary to respondent’s contention, “KETSARAP” cannot be the dominant
feature of the mark as it is merely descriptive of the product. Furthermore, it is the “PAPA” mark that
has been in commercial use for decades and has established awareness and goodwill among consumers.
The Court likewise agrees with the IPO-BLA that the word “PAPA” is also the dominant feature of
respondent’s “PAPA BOY & DEVICE” mark subject of the application, such that “the word ‘PAPA’ is
written on top of and before the other words such that it is the first word/figure that catches the eyes.”49
Furthermore, as the IPO Director General put it, the part of respondent’s mark which appears
prominently to the eyes and ears is the phrase “PAPA BOY” and that is what a purchaser of respondent’s
product would immediately recall, not the smiling hog.
7. CITIGROUP, INC. VS. CITYSTATE SAVINGS BANK, INC.

G.R. No. 205409, June 13, 2018.
146
Ponente: LEONEN, J.
Student Assigned: GUANIO
DOCTRINE: There is no objective test for determining whether the confusion is likely. Likelihood of
confusion must be determined according to the particular circumstances of each case. To aid in determining
the similarity and likelihood of confusion between marks, our jurisprudence has developed two (2) tests: the
dominancy test and the holistic test. The Court explained these tests in Coffee Partners, Inc. v. San Francisco
Coffee & Roastery, Inc.:
"The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that
might cause confusion and deception, thus constituting infringement. If the competing trademark contains
the main, essential, and dominant features of another, and confusion or deception is likely to result,
infringement occurs. Exact duplication or imitation is not required. The question is whether the use of the
marks involved is likely to cause confusion or mistake in the mind of the public or to deceive consumers.
In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the products,
including the labels and packaging, in determining confusing similarity. The discerning eye of the observer
must focus not only on the predominant words but also on the other features appearing on both marks in
order that the observer may draw his conclusion whether one is confusingly similar to the other."
Applying the dominancy test, the prevalent feature of respondent's mark, the golden lion's head device, is
not present at all in any of petitioner's marks. The only similar feature between respondent's mark and
petitioner's collection of marks is the word "CITY" in the former, and the "CITI" prefix found in the latter.
The Court agrees with the findings of the Court of Appeals that this similarity alone is not enough to create
a likelihood of confusion.
FACTS: In a Petition for Review on Certiorari before the Supreme Court filed by petitioner Citigroup
Inc (Citigroup) assailing the Decision and Resolution of the Court of Appeals dismissing the Petition
for Review against the Office of the Director General of the Intellectual Property Office (IPO) in
finding there is no resemblance between the marks of Citigroup and respondent Citystate Savings Bank,
Inc (Citystate).
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Citibank Savings Inc. offers ATM Services in the Philippines where the ATM cards are labelled
“CITICARD”. The trademark CITICARD is owned by Citigroup or Citibank N.A., a wholly owned
subsidiary of Citigroup, and is registered in the Intellectual Property Office (IPO) along with other
trademarks such as: “CITI and arc design”, “CITIBANK”, “CITIBANK PAYLINK”, etc. On the other
hand, Citystate was established by a group of Filipinos and Singaporean companies who applied with
the IPO for the registration of its trademark “CITY CASH GOLDEN LION’S HEAD”.
After Citystate applied for registration of its trademark "CITY CASH WITH GOLDEN LION'S
HEAD" with the (IPO), Citigroup filed an opposition to said application claiming that the mark being
applied for is confusingly similar to its own “CITI” marks. It asserts that applying the dominancy test,
there is a finding of confusing similarity from the “CITY CASH” pointed as the dominant part of the
mark of Citystate which appears nearly identical to “CITI”. Citystate argues that its mark is not
confusingly similar to Citigroup’s claiming that the phonetic similarity between “CITY” and “CITI” is
not sufficient to deny its registration.
The Director of the Bureau of Legal Affairs of the Intellectual Property Office ruled that applying the
dominancy test and considering Citystate's dominant feature of the applicant's mark was identical or
confusingly similar to a registered trademark of Citigroup. Director General Adrian S. Cristobal, Jr.
however, gave due course to Citystate's trademark application and considered the golden lion head
device to be the prominent or dominant feature of Citystate's mark, and not the word "CITY." Thus,
Citystate's mark did not resemble Citigroup's mark such that deception or confusion was likely. The
CA ruled that Citystate's mark was not confusingly or deceptively similar to Citigroup's marks.
Before the Supreme Court, Citigroup claims that the Court of Appeals erred in finding that there was
no confusing similarity between the trademark that Citystate applied for and Citigroup's own
trademarks. Citigroup asserts that when the dominancy test is applied to the Court of Appeals' findings
of fact, the necessary result is a finding of confusing similarity. Citystate argues that its mark is not
confusingly similar to Citigroup’s and that Citigroup's fears are purely speculative. It claims that the
phonetic similarity between "CITY" and "CITI" is not sufficient to deny its registration, asserting that
this Court has ruled that idem sonans alone is insufficient basis for a determination of the existence of
confusing similarity.
ISSUE: Whether or not there is a confusing similarity between Citigroup's and Citystate's marks. (NO.)
RULING: There is no confusing similarity between Citigroup's and respondent Citystate's marks.
There is no objective test for determining whether the confusion is likely. Likelihood of confusion must
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be determined according to the particular circumstances of each case. To aid in determining the
similarity and likelihood of confusion between marks, our jurisprudence has developed two (2) tests:
the dominancy test and the holistic test.
The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that
might cause confusion and deception, thus constituting infringement. If the competing trademark
contains the main, essential, and dominant features of another, and confusion or deception is likely to
result, infringement occurs. Exact duplication or imitation is not required. The question is whether the
use of the marks involved is likely to cause confusion or mistake in the mind of the public or to deceive
consumers.
In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the products,
including the labels and packaging, in determining confusing similarity. The discerning eye of the
observer must focus not only on the predominant words but also on the other features appearing on
both marks in order that the observer may draw his conclusion whether one is confusingly similar to the
other.
Applying the dominancy test, the Court sees that the prevalent feature of Citysate’s mark, the golden
lion's head device, is not present at all in any of Citigroup's marks. The only similar feature between
Citystate's mark and Citigroup's collection of marks is the word "CITY" in the former, and the "CITI"
prefix found in the latter. This similarity alone is not enough to create a likelihood of confusion.
The dissimilarities between the two marks are noticeable and substantial. Citystate's mark, "CITY
CASH WITH GOLDEN LION'S HEAD", has an insignia of a golden lion's head at the left side of the
words "CITY CASH", while Citigroup's "CITI" mark usually has an arc between the two I's. A further
scrutiny of the other "CITI" marks of Citigroup would show that their font type, font size, and color
schemes of the said "CITI" marks vary for each product or service. Most of the time, Citigroup’s "CITI"
mark is joined with another term to form a single word, with each product or service having different
font types and color schemes. On the contrary, the trademark of Citystate consists of the words "CITY
CASH", with a golden lion's head emblem on the left side. It is, therefore, improbable that the public
would immediately and naturally conclude that Citystate's "CITY CASH WITH GOLDEN LION'S
HEAD" is but another variation under Citigroup's "CITI" marks.
Therefore, there is no confusing similarity between petitioner Citigroup, Inc.'s and respondent
Citystate Savings Bank, Inc.'s marks.
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8. ZUNECA PHARMACEUTICAL VS. NATRAPHARM, INC.
G.R. No. 211850, September 8, 2020.
Student Assigned: GONZALES, ALEXANDRIA
DOCTRINE: While it is the fact of registration which confers ownership of the mark and enables the
owner thereof to exercise the rights expressed in Section 147 of the IP Code, the first-to-file rule nevertheless
prioritizes the first filer of the trademark application and operates to prevent any subsequent applicants
from registering marks described under Section 123.1 (d) of the IP Code.
FACTS: The case involves a dispute between the use and ownership of the confusingly similar marks
“ZYNAPS” and “ZYNAPSE”.
Zuneca Pharmaceutical (“Zuneca”) has been engaged in the sale of “ZYNAPS,” an anti-convulsant used
to control all types of seizure disorders like epilepsy as early as 2004. Natrapharm, Inc. (“Natrapharm”),
on the other hand, has also been engaged in the sale of “ZYNAPSE” for the treatment of cerebrovascular
disease or stroke, and is the registrant of the “ZYNAPSE” mark which was registered with the
Intellectual Property Office of the Philippines (“IPO”) on 24 September 2007.
On 29 November 2007, Natrapharm filed a Trademark Infringement case against Zuneca, alleging that
“ZYNAPS” is confusingly similar to its registered trademark “ZYNAPSE” and the resulting likelihood
of confusion is dangerous because the marks cover medical drugs intended for different types of illnesses.
While Zuneca argued that as the first entity to use the mark in good faith, it was the rightful owner of
the mark “ZYNAPS.”
RTC: The RTC ruled that the first filer in good faith defeats a first user in good faith who did not file
any application for registration. Hence, Natrapharm, as the first registrant, had trademark rights over
"ZYNAPSE" and it may prevent others, including Zuneca, from registering an identical or confusingly
similar mark. Moreover, the RTC ruled that there was insufficient evidence that Natrapharm had
registered the mark "ZYNAPSE" in bad faith. Further, following the use of the dominancy test, the RTC
likewise observed that "ZYNAPS" was confusingly similar to "ZYNAPSE." To protect the public from
the disastrous effects of erroneous prescription and mistaken dispensation, the confusion between the
two drugs must be eliminated.
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CA: On appeal, the Court of Appeals (CA) affirmed the Decision of the RTC. Hence, the instant
petition for review on Certiorari.
ISSUE:
1. Whether the ownership of a mark is acquired through registration and no longer through “prior use”.
(YES.)
2. Whether, assuming that both parties owned their respective marks, do the rights of the first-to-
file registrant Natrapharm defeat the rights of the prior user Zuneca. (YES.)
3. Whether Zuneca should be held liable for trademark infringement. (NO.)
RULING:
1. The Supreme Court held that the language of the Intellectual Property Code of the Philippines (“IP
Code”) clearly provides that ownership of a mark is acquired through registration. Furthermore, the
Supreme Court stated that the intention of the lawmakers was to abandon the rule that ownership of a
mark is acquired through prior use, and that the rule on ownership used in Berris Agricultural Co., Inc.
v. Abyadang (“Berris”) and E. Y. Industrial Sales, Inc. et al. v. Shen Dar Electricity and Machinery Co.,
Ltd. (“E. Y Industrial Sales, Inc.”) is inconsistent with the IP Code regime of acquiring ownership
through registration.
Thus, Upon the effectivity of the IP Code on 01 January 1998, the manner of acquiring ownership of
trademarks is acquired through registration, as expressed in Section 122 of the IP Code. To clarify, while
it is the fact of registration which confers ownership of the mark and enables the owner thereof to
exercise the rights expressed in Section 147 of the IP Code, the first-to-file rule nevertheless prioritizes
the first filer of the trademark application and operates to prevent any subsequent applicants from
registering marks described under Section 123.1 (d) of the IP Code.
Section 123 (d) (d) Is identical with a registered mark belonging to a different proprietor or a mark with
an earlier filing or priority date, in respect of: (i) The same goods or services, or (ii) Closely related goods
or services, or (iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion;
Reading together Sections 122 and 123.1 (d) of the IP Code, a registered mark or a mark with an earlier
filing or priority date generally bars the future registration of — and the future acquisition of rights in
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— an identical or a confusingly similar mark, in respect of the same or closely-related goods or services,
if the resemblance will likely deceive or cause confusion.
At present, prior use no longer determines the acquisition of ownership of a mark. To emphasize, for
marks that are first used and/or registered after the effectivity of the IP Code, ownership is no longer
dependent on the fact of prior use in light of the adoption of the first-to-file rule and the rule that
ownership is acquired through registration.
2. Bad faith and good faith in trademark registration and use.
In a bid to invalidate Natrapharm's rights as first registrant, Zuneca further argues that Natrapharm had
registered the mark fraudulently and in bad faith. In cases of registration of a mark by means of fraud or
bad faith, a party may pray for its cancellation at any time by filing a petition for cancellation under
Section 151 (b) of the IP Code,
“SECTION 151. Cancellation. – 151.1. A petition to cancel a registration of a mark under

this Act may be filed with the Bureau of Legal Affairs by any person who believes that he is or
will be damaged by the registration of a mark under this Act as follows:
xxx
(b) At any time, if the registered mark becomes the generic name for the goods or services, or a
portion thereof, for which it is registered, or has been abandoned, or its registration was obtained
fraudulently or contrary to the provisions of this Act xxx”
The presence of bad faith alone renders void the trademark registrations. Accordingly, it follows as a
matter of consequence that a mark registered in bad faith shall be cancelled by the IPO or the courts, as
the case may be, after the appropriate proceedings.
This concept of bad faith, however, does not only exist in registrations. To the mind of the Court, the
definition of bad faith as knowledge of prior creation, use, and/or registration by another of an identical
or similar trademark is also applicable in the use of trademarks without the benefit of registration.
Accordingly, such bad faith use is also appropriately punished in the IP Code as can be seen in its unfair
competition provisions. It is apparent, therefore, that the law intends to deter registrations and use of
trademarks in bad faith.
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Concurrent with these aims, the law also protects prior registration and prior use of trademarks in good
faith. Being the first-to-file registrant in good faith allows the registrant to acquire all the rights in a mark.
This can be seen in Section 122 vis-à-vis the cancellation provision in Section 155.1 of the IP Code.
Reading these two provisions together, it is clear that when there are no grounds for cancellation —
especially the registration being obtained in bad faith or contrary to the provisions of the IP Code, which
render the registration void — the first-to-file registrant acquires all the rights in a mark. In the same
vein, prior users in good faith are also protected in the sense that they will not be made liable for
trademark infringement even if they are using a mark that was subsequently registered by another
person. This is expressed in Section 159.1 of the IP Code.
SECTION 122. How Marks are Acquired. - The rights in a mark shall be acquired
through registration made validly in accordance with the provisions of this law. (Sec. 2-A,
R.A. No. 166a)
x x x x
SECTION 151. Cancellation. - 151.1. A petition to cancel a registration of a mark under

this Act may be filed with the Bureau of Legal Affairs by any person who believes that he is
or will be damaged by the registration of a mark under this Act as follows:
(a) Within five (5) years from the date of the registration of the mark under this Act.
(b) At any time, if the registered mark becomes the generic name for the goods or services,
or a portion thereof, for which it is registered, or has been abandoned, or its registration
was obtained fraudulently or contrary to the provisions of this Act, or if the registered mark
is being used by, or with the permission of, the registrant so as to misrepresent the source of
the goods or services on or in connection with which the mark is used. If the registered mark
becomes the generic name for less than all of the goods or services for which it is registered,
a petition to cancel the registration for only those goods or services may be filed. A registered
mark shall not be deemed to be the generic name of goods or services solely because such
mark is also used as a name of or to identify a unique product or service. The primary
significance of the registered mark to the relevant public rather than purchaser motivation
shall be the test for determining whether the registered mark has become the generic name
of goods or services on or in connection with which it has been used,(n)
(c) At any time, if the registered owner of the mark without legitimate reason fails to use
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the mark within the Philippines, or to cause it to be used in the Philippines by virtue of a
license during an uninterrupted period of three (3) years or longer. (Emphasis and
underscoring supplied)
In the same vein, prior users in good faith are also protected in the sense that they will not be made
liable for trademark infringement even if they are using a mark that was subsequently registered
by another person. This is expressed in Section 159.1 of the IP Code, which reads:
SECTION 159. Limitations to Actions for Infringement. - Notwithstanding any

other provision of this Act, the remedies given to the owner of a right infringed under this
Act shall be limited as follows:
159.1. Notwithstanding the provisions of Section 155 hereof, a registered mark shall have
no effect against any person who, in good faith, before the filing date or the priority date,
was using the mark for the purposes of his business or enterprise: Provided, That his right
may only be transferred or assigned together with his enterprise or business or with that part
of his enterprise or business in which the mark is used
At this point, it is important to highlight that the following facts were no longer questioned by both
parties:
(a) Natrapharm is the registrant of the "ZYNAPSE" mark which was registered with the IPO on
September 24, 2007;
(b) Zuneca has been using the "ZYNAPS" brand as early as 2004; and
(c) “ZYNAPSE" and "ZYNAPS" are confusingly similar and both are used for medicines.
In light of these settled facts, it is clear that Natrapharm is the first-to-file registrant of "ZYNAPSE".
Zuneca, on the other hand, is a prior user in good faith of a confusingly similar mark, "ZYNAPS". What
remains contentious is Natrapharm's good or bad faith as Zuneca contends that the mark was registered
in bad faith by Natrapharm. Indeed, if Zuneca's contention turns out to be true, Natrapharm would
not be the owner of "ZYNAPSE" and it would not have the right under Section 147.1 of the IP Code to
prevent other entities, including Zuneca, from using confusingly similar marks for identical or similar
goods or services. Further, Natrapharm's infringement case would fail because its "ZYNAPSE"
registration would then be voided.
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As a rule, good faith is always presumed, and upon him who alleges bad faith on the part of a possessor
rests the burden of proof. In this case, not only was Natrapharm able to explain the origin of the name,
it was also able to show that it had checked the IMS-PPI, IPO, and Bureau of Food and Drug
Administration Philippines (“BFAD”) databases and found that there was no brand name which was
confusingly similar to “ZYNAPSE”.
Since Natrapharm was not proven to have been in bad faith, it was thus considered to have acquired all
the rights of a trademark owner under the IP Code upon the registration of the “ZYNAPSE” mark.
Consequently, Zuneca's counterclaims against Natrapharm were correctly dismissed by the lower
courts. To be sure, Zuneca did not have any right to prevent third parties, including Natrapharm, from
using marks confusingly similar to its unregistered "ZYNAPS" mark because it is not an "owner of a
registered mark" contemplated in Section 147.1 of the IP Code.
3. While Natrapharm is the owner of the “ZYNAPSE” mark, this does not, however, automatically
mean that its complaint against Zuneca is with merit.
Prior users in good faith are also protected in the sense that they will not be made liable for trademark
infringement even if they are using a mark that was subsequently registered by another person. Section
159.1 of the IP Code provides:
“Notwithstanding the provisions of Section 155 hereof, a registered mark shall have no effect against any
person who, in good faith, before the filing date or the priority date, was using the mark for the purposes of
his business or enterprise: Provided, that his right may only be transferred or assigned together with his
enterprise or business or with that part of his enterprise or business in which the mark is used.
Read as a whole, Section 159.1 of the IP Code clearly contemplates that a prior user in good faith may
continue to use its mark even after the registration of the mark by the first-to-file registrant in good faith,
subject to the condition that any transfer or assignment of the mark by the prior user in good faith
should be made together with the enterprise or business or with that part of its enterprise or business in
which the mark is used. The mark cannot be transferred independently of the enterprise and business
using it.
In any event, the application of Section 159.1 of the IP Code necessarily results in at least two entities -
the unregistered prior user in good faith or its assignee or transferee, on one hand; and the first-to-file
registrant in good faith on the other - concurrently using identical or confusingly similar marks in the
market, even if there is likelihood of confusion. While this situation may not be ideal, as eruditely explained
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in the Concurring Opinion of Justice Perlas-Bernabe, the Court is constrained to apply Section 159.1
of the IP Code as written.
9. KOLIN ELECTRONICS CO., INC., VS. KOLIN PHILIPPINES INTERNATIONAL, INC.

G.R. No. G.R. No. 228165. February 09, 2021.
Student Assigned: NEO
DOCTRINE: The Dominancy Test focuses on the similarity of the prevalent features of the competing
trademarks which might cause confusion or deception, and thus infringement. If the competing
trademark contains the main, essential or dominant features of another, and confusion or deception is
likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary
that the infringing label should suggest an effort to imitate. The question is whether the use of the marks
involved is likely to cause confusion or mistake in the mind of the public or deceive purchasers.
FACTS: In 1993, Kolin Electronics Industrial Supply (KEIS) filed a trademark application for
“KOLIN” covering the following products under Class 9: automatic voltage regulator, converter,
recharger, stereo booster, AC-DC regulated power supply, step-down transformer, and PA amplifier
AC-DC. He then executed a Deed of Assignment of Assets which includes the pending application of
registration of KOLIN mark in favor of Kolin Electronics Co., Inc. (KECI).
Taiwan Kolin Co., Ltd. (TKC) filed an opposition to KECI’s trademark application on the ground that
TKC also has a trademark application for “KOLIN” in 1996 covering the following products: "color
television, refrigerator, window-type air conditioner, splittype air conditioner, electric fan, and water
dispenser".
In 2002, the Intellectual Property Office Bureau of Legal Affairs (IPO-BLA) ruled in favor of KECI.
Upon appeal, the IPO-DG eventually issued a Certificate of Registration for KOLIN in favor of KECI.
Upon review, the CA also ruled in favor of KECI. Thus, by virtue of this ruling (KECI ownership case),
KECI is the adjudicated owner of the KOLIN mark under the Trademark Law as against TKC.
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However, in a 2015 case entitled Taiwan Kolin Corporation, Ltd. v. Kolin Electronics Co., Inc. (Taiwan
Kolin case), the Court gave due course to TKC's Trademark Application for KOLIN. To recall, TKC
had also filed in 1996 a trademark application for “KOLIN” which was considered abandoned in April
18, 1999 but was revived in 2001.
On September 11, 2006 - more than a month after the promulgation of the KECI ownership case - KPII,
an affiliate of TKC, filed trademark application for the “KOLIN” mark under Class 9 covering
"Televisions and DVD players". On June 12, 2007, KECI filed an opposition based on, among others,
the fact that it is the registered owner of the KOLIN mark and that the registration of KPII's kolin mark
will cause confusion among consumers. The IPO-BLA sustained KECI’s opposition which was
affirmed by the IPO-DG. Upon appeal, the CA granted KPII’s petition and held that KPII may register
its mark for television sets and DVD players and the doctrine of res judicata forbids it from arriving at a
contrary conclusion. Hence, this petition.
ISSUE: Whether KPII should be allowed to register its mark. (NO.)
RULING: KPII is not allowed to register its kolin mark for "Televisions and DVD players."
The Supreme Court held that: (1) there is resemblance between KECI's KOLIN and KPII's kolin marks;
(2) the goods covered by KECI's KOLIN are related to the goods covered by KPII's kolin; (3) there is
evidence of actual confusion between the two marks; (4) the goods covered by KPII's kolin fall within
the normal potential expansion of business of KECI; (5) sophistication of buyers is not enough to
eliminate confusion; (6) KPII's adoption of KECI's coined and fanciful mark would greatly contribute
to likelihood of confusion; and (7) KPII applied for kolin in bad faith. Thus, KPII's application for kolin
should be denied because it would cause likelihood of confusion and KECI's rights would be damaged.
It must be stressed that KECI was already declared as the owner of the mark under the Trademark Law.
Sec. 226 171 of the IP Code states that nothing in the IP Code shall adversely affect the rights of the
enforcement of marks acquired in good faith prior to the effective date of said law. As discussed in the
facts, the existence of likelihood of confusion is already considered as damage that would be sufficient
to sustain the opposition and rejection of KPII’s trademark application. Moreover, the Court likewise
stated that by granting this registration, KPII would acquire exclusive rights over the stylized version of
KOLIN for a range of goods/services or any related goods/services falling within the normal potential
expansions of KPII’s business. Owing to the peculiar circumstances of this case, this will effectively
amount to a curtailment of KECI's right to freely use and enforce the KOLIN word mark, or any stylized
version thereof, for its own range of goods/services, especially against KPII, regardless of the existence
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of actual confusion. Thus, based on Section 122 vis-a-vis Section 236 of the IP Code, the Court cannot
give due course to KPII's trademark application for "kolin".
Considering the adoption of the Dominancy Test and the abandonment of the Holistic Test, as
confirmed by the provisions of the IP Code and the legislative deliberations, the Court hereby makes it
crystal clear that the use of the Holistic Test in determining the resemblance of marks has been
abandoned.
The inapplicability of the Taiwan Kolin case in the case at bar is thus evident. As correctly pointed out
by Associate Justice Leonen, the Taiwan Kolin case used the Holistic Test in evaluating trademark
resemblance. This is improper precedent because the Dominancy Test is what is prescribed under the
law.
Applying the Dominancy Test here, KPII's kolin mark resembles KECI's KOLIN mark because the
word "KOLIN" is the prevalent feature of both marks. Phonetically or aurally, the marks are exactly the
same. Surely, the manner of pronouncing the word "KOLIN" does not change just because KPII's mark
is in lowercase and contains an italicized orange letter "i". In terms of connotation and overall
impression, there seems to be no difference between the two marks.
Another consideration is the type of marks used. Logically, this may affect the determination of
resemblance of the marks in terms of their visual, aural, or connotative aspects, which are key areas to
consider in using the Dominancy Test. Using the persuasive logic in Cunningham together with the
Dominancy Test, there is no doubt that the minor differences between kolin and KOLIN mark should
be completely disregarded.
The fact that KPII's trademark application possesses special characteristics (e.g., the italicized orange
letter "i") not present in KECI's KOLIN word mark makes no difference in terms of appearance, sound,
connotation, or overall impression because the "KOLIN" word itself is the subject of KECI's
registration.
10. SUYEN CORP. VS. DANJAQ LLC

G.R. No. 250800, July 6, 2021.
158
DOCTRINE: By using the terms "likelihood of confusion," the law recognizes the reality that trademark
infringement cases delve into a wide spectrum of instances where a mark can ride on the goodwill and
reputation of a business or might lead the purchaser to assume a connection between the competing marks.
In determining likelihood of confusion between marks used on non-identical goods or services, several
factors may be taken into account, such as, but not limited to:
a) The strength of plaintiff's mark;
b) The degree of similarity between the plaintiff's and the defendant's marks;
c) The proximity of the products or services;
d) The likelihood that the plaintiff will bridge the gap;
e) Evidence of actual confusion;
f) The defendant's good faith in adopting the mark;
g) The quality of defendant's product or service; and/or
h) The sophistication of the buyers.
FACTS: This case concerns Suyen Corporation's (Suyen) trademark application filed on February 16,
2010 for "AGENT BOND" covering "hair refresher, hair gel, hair lotion, hair treatment, hair shampoo,
and hair conditioner" under Class 3 of the Nice Classification. Respondent Danjaq LLC (Danjaq) a
foreign corporation based in California, USA filed an Opposition against this application, alleging that
it is the owner of all registered "JAMES BOND" marks and their associated marks (BOND marks).
Opposer claimed that it first used the "JAMES BOND" mark in 1962 to market and produce various
merchandise and films worldwide. Allegedly, the character is referred to in popular culture simply as
"AGENT BOND." Presenting as evidence its several trademark registrations worldwide, Danjaq claims
that its BOND marks are well-known and deserve protection from copying or imitation and that
Suyen's application was made in bad faith to ride on the popularity of its marks. In Danjaq's Position
Paper, Danjaq retorted that it is not actual confusion that is required to deny registration of a trademark
but the possibility of confusion. The use of AGENT BOND causes confusion as to the origin — making
it appear that Danjaq approved the use of AGENT BOND as a trademark. Because JAMES BOND is
a well-known mark, any product bearing the JAMES BOND trademark or other related marks is highly
marketable.
ISSUE: Whether there is an existence of a likelihood of confusion as to AGENT BOND to JAMES

BOND. (YES.)
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RULING: The petition must fail. AGENT BOND is non-registrable because it nearly resembles the
registered mark, JAMES BOND and is likely to deceive and cause confusion. Suyen's application for
registration of the AGENT BOND mark is denied for violating Section 123.1, paragraphs (d) and (f) of
the Intellectual Property Code. the fact that Suyen has marketed its products carrying the AGENT
BOND mark with the BENCH or FIX brand does not change the fact that using the combination of
the words "agent" and "bond" in that particular order may lead the purchaser to believe that the product
is related to JAMES BOND. Again, it is not actual confusion that is required in trademark infringement
cases but only a likelihood of confusion. Dominancy Test does not solely rely on the visual and aural
aspects of the mark but also the connotative comparisons and overall impressions between them. In
other words, it is not the fact that a particular set of words was used but the manner in which they were
utilized. The terms "agent" and "bond" — when put together in that particular order — inevitably
suggests a connection with James Bond as he was also known by his spy name, Agent 007.
11. MEDINA VS. GLOBAL QUEST VENTURES, INC.

G.R. No. 213815, February 8, 2021.
Ponente: LEONEN, J.
Student Assigned: MANGABAT
DOCTRINE: A certificate of registration accords the registrant a prima facie presumption of their
ownership of the mark. However, this presumption may be rebutted by proof that the registration was
obtained fraudulently or contrary to the provisions of the Intellectual Property Code.
FACTS: Respondent Global Quest Ventures, Inc. (Global) is a domestic corporation which
manufactures and sells gulaman jelly powder mix. The copyrighted name "Mr. Gulaman" and its logo
design are printed on the packaging box and sachet of its product.
On February 1, 2006, Global filed an application for trademark registration of its copyrighted name
"Mr. Gulaman" before the Intellectual Property Office. However, Global discovered that Ma.
Sharmaine R. Medina (Medina) had a pending application for trademark registration of the name "'Mr.
Gulaman' (Stylized)." Medina's application, filed on May 9, 2005, was for goods under Class 29 of the
International Classification of goods.
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According to Global, in 2004, it learned that Bendum Trading (Bendum) imitated its gulaman jelly
powder mix product and used "Mr. Gulaman" and its logo design in the product's packaging. Global
had instituted legal actions against Bendum but the product is still circulating in the market. Global
suspected that Medina was working for Bendum considering that she used its address as her business
address.
Despite Global's opposition, Certificate of Registration No. 4-2005-004181 was issued in Medina's
name on June 25, 2006. Global then filed a Petition for Cancellation of Medina's certificate of
registration.
BLA-IPO granted Global's Petition for Cancellation of Medina's Certificate of Trademark Registration
on August 8, 2008. It found that the registration was obtained fraudulently or contrary to the provisions
of the Intellectual Property Code.
The word "MR GULAMAN" in the contending marks, especially since this word is written in the same
style and color (green). While the appellant's mark is only a stylized word mark and the Appellee's mark
contains a pictorial illustration of a "chef or baker holding a plate with a jelly on top colored red, green,
yellow, blue and black", the similarity of the presentation of the stylized word "MR. GULAMAN" gives
the impression that the marks are just variations of the other and belong to the same source or origin.
ISSUE: Whether the cancellation of Medina’s certificate of registration is proper. (YES.)
RULING: The Intellectual Property Code defines trademark as "any visible sign capable of
distinguishing the goods ... of an enterprise. It is "any distinctive word, name, symbol, emblem, sign, or
device, or any combination thereof, adopted and used by a manufacturer or merchant on his goods to
identify and distinguish them from those manufactured, sold, or dealt by others." It is an intellectual
property which is protected by law.
The rights in a mark are acquired through registration made in accordance with the Intellectual Property
Code. Once registered, the certificate of registration constitutes "a prima facie evidence of the validity
of the registration, the registrant's ownership of the mark, and of the registrant's exclusive right to use
the same in connection with the goods or services and those that are related thereto specified in the
certificate."
Here, the Court of Appeals recognized the prima facie presumption accorded by petitioner's certificate
of registration. However, it noted that this presumption is not indefeasible and may be overcome by
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evidence of prior use by another. Applying this Court's pronouncement in Berris Agricultural Co., Inc.
v. Abyadang, the Court of Appeals decreed:
... prima facie presumption brought about by the registration of a mark may be challenged and
overcome, in an appropriate action, by proof of the nullity of the registration or of non-use of the
mark, except when excused. Moreover, the presumption may likewise be defeated by evidence of
prior use by another person, i.e., it will controvert a claim of legal appropriation or of ownership
based on registration by a subsequent user. This is because a trademark is a creation of use and
belongs to one who first used it in trade or commerce.
That prima facie evidence attached to the Certificate of Registration issued to herein petitioner was
overcome by retracing the origin of respondent's right from that of Mr. Benjamin Irao acquired in 1996
which Mr. Irao assigned to herein respondent in February 2005, earlier than the petitioner's certificate
of Registration issued on 25 June 2006.
As a rule, "Trademark is a creation of use and belongs to one who first used it in trade or commerce."
Accordingly, while a certificate of registration constitutes a prima facie evidence of the registrant's
ownership of the mark, this presumption may be overcome by proof of another person's prior use.
It must be noted that the rule that ownership is acquired by prior use was abandoned in the recent case
of Zuneca Pharmaceutical v. Natrapharm, Inc. In Zuneca, the Court noted that in the past, ownership
over trademark was acquired through actual use. However, upon the enactment of Republic Act No.
8293 or the Intellectual Property Code, ownership is now acquired through registration.
Once the IP Code took effect, the general rule now is prior use no longer determines the acquisition of
ownership of a mark in light of the adoption of the rule that ownership of a mark is acquired through
registration made validly in accordance with the provisions of the IP Code.
Under the Trademark Law, as amended, the first user of the mark had the right to file a cancellation case
against an identical or confusingly mark registered in good faith by another person. However, with the
omission in the IP Code provision of the phrase "previously used in the Philippines by another and not
abandoned," said right of the first user is no longer available. In effect, based on the language of the
provisions of the IP Code, even if the mark was previously used and not abandoned by another person,
a good faith applicant may still register the same and thus become the owner thereof, and the prior user
cannot ask for the cancellation of the latter's registration.
Certainly, while the IP Code and the Rules of the IPO mandate that the applicant/registrant must prove
162
continued actual use of the mark, it is the considered view of the Court that this does not imply that
actual use is still a recognized mode of acquisition of ownership under the IP Code. Rather, these must
be understood as provisions that require actual use of the mark in order for the registered owner of a
mark to maintain his ownership.
In the same vein, the prima facie nature of the certificate of registration is not indicative of the fact that
prior use is still a recognized mode of acquiring ownership under the IP Code. Rather, it is meant to
recognize the instances when the certificate of registration is not reflective of ownership of the holder
thereof, such as when: [1] the first registrant has acquired ownership of the mark through registration
but subsequently lost the same due to non-use or abandonment (e.g., failure to file the Declaration of
Actual Use); [2] the registration was done in bad faith; [3] the mark itself becomes generic; [4] the mark
was registered contrary to the IP Code (e.g., when a generic mark was successfully registered for some
reason); or [5] the registered mark is being used by, or with the permission of, the registrant so as to
misrepresent the source of the goods or services on or in connection with which the mark is used. 79
This Court continued that while registration vests ownership over a mark, bad faith may still be a ground
for the cancellation of trademark registrations. Section 151(b) of the Intellectual Property Code states:
SECTION 151. Cancellation. - 151.1. A petition to cancel a registration of a mark under this
Act may be filed with the Bureau of Legal Affairs by any person who believes that he is or will
be damaged by the registration of a mark under this Act as follows:
....
(b) At any time, if the registered mark becomes the generic name for the goods or services, or a
portion thereof, for which it is registered, or has been abandoned, or its registration was obtained
fraudulently or contrary to the provisions of this Act, or if the registered mark is being used by,
or with the permission of, the registrant so as to misrepresent the source of the goods or services
on or in connection with which the mark is used. If the registered mark becomes the generic
name for less than all of the goods or services for which it is registered, a petition to cancel the
registration for only those goods or services may be filed. A registered mark shall not be deemed
to be the generic name of goods or services solely because such mark is also used as a name of or
to identify a unique product or service. The primary significance of the registered mark to the
relevant public rather than purchaser motivation shall be the test for determining whether the
registered mark has become the generic name of goods or services on or in connection with
which it has been used.
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Bad faith means that the applicant or registrant has knowledge of prior creation, use and/or registration
by another of an identical or similar trademark. In other words, it is copying and using somebody else's
trademark. Fraud, on the other hand, may be committed by making false claims in connection with the
trademark application and registration, particularly, on the issues of origin, ownership, and use of the
trademark in question, among other things.
In canceling the petitioner's certificate of registration, the BLA-IPO concluded that petitioner copied
respondent's mark. It compared the two and found that the petitioner's mark is identical with
respondent's. It noted that the word "Mr. Gulaman" in both of their marks are "exactly the same in all
aspects. This conclusion was bolstered by its finding that in petitioner's Declaration of Actual Use, she
submitted photographs of a packaging showing respondent's "Mr. Gulaman" and its logo design.
12. EMZEE FOODS, INC. VS. ELARFOODS, INC.

G.R. No. 220558, February 17, 2021.
DOCTRINE: A mark pertains to "any visible sign capable of distinguishing the goods (trademark) or
services (service mark) of an enterprise and shall include a stamped or marked container of goods."
Particularly, a trademark is "any distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof, adopted and used by a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt by others." A trademark is an intellectual
property that deserves protection under the law.
FACTS: Sometime in 1970, spouses Jose and Leonor Lontoc (spouses Lontoc) established a business
of selling Filipino food and roasted pigs, which they marketed under the name "ELARS Lechon.”
Desiring to leave a legacy, in 1989, the spouses Lontoc incorporated their food business. Thus, on May
19, 1989, Elarfoods, Inc. (respondent) was granted a Certificate of Registration by the Securities and
Exchange Commission (SEC).
Since then, the spouses Lontoc actively managed the respondent corporation. Over the years,
respondent used Elarfoods, Inc. as its business name and marketed its products, particularly, its roasted
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pigs as "ELAR'S LECHON ON A BAMBOO TRAY." Eventually, it rose to notoriety as the "ELAR'S
LECHON" brand.
However, without respondent's knowledge and permission, petitioner sold and distributed roasted pigs
using the marks "ELARZ LECHON", "ELAR LECHON," "PIG DEVICE" and "ON A BAMBOO
TRAY", thereby making it appear that petitioner was a branch or franchisee of the respondent.
Respondent filed with the IPO an application for registration of the trademark "ELARS LECHON."
Thereafter, on October 1, 2001, respondent filed two more applications for the marks "ON A
BAMBOO TRAY" and "ROASTED PIG DEVICE" (collectively, subject marks). The mark
"ROASTED PIG DEVICE" is a design or representation of a roasted pig on a bamboo stick placed on
top of a bamboo tray.
Respondent sent the petitioner a Cease and Desist Letter urging the latter to stop using the subject marks
or any variations thereof. However, petitioner ignored the demand and continued selling its roasted pigs
under the marks "ELARZLECHON," "ELAR LECHON," "PIG DEVICE," and "ON A BAMBOO
TRAY," thereby causing confusion as to the source and origin of the products.
Thereafter, respondent filed three separate complaints for unfair competition and violation of
intellectual property rights against petitioner for the latter's use of the former's trademarks. Respondent
claimed that petitioner unfairly rode on its fame, goodwill and reputation, causing its sales and profits
to be diverted to petitioner.
Petitioner countered that the respondent is not the owner of the subject marks. Rather, respondent is a
mere alter ego or business conduit of the spouses Lontoc who have proprietary rights over the marks.
Petitioner related that the mark "Elar" stands for "L.R.," which are the initials of the spouses Lontoc-
Rodriguez's family names. In fact, since 1967, the spouses Lontoc have used "Elar" for their other
corporations, such as Elar Development (ELARDEV) for their livestock business; Casa Elar
Incorporated (CASA ELAR) for their restaurant business; and Elar Foods (Elarfoods) for their meat
business. Petitioner further narrated that Jose Lontoc (Jose) himself designed the logo which became
the symbol and mark of "ELARS LECHON." The phrase "ON A BAMBOO TRAY" was loosely used
by Jose and through word of mouth, became associated with "ELARS LECHON".
The BLA (Bureau of Legal Affairs) dismissed the complaint. It ruled that the spouses Lontoc are the
owners of the subject marks by prior commercial use. Said marks acquired popularity through their
consistent use in connection with the spouses Lontoc's lechon business, even prior to the respondent's
incorporation.
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Meanwhile, during the pendency of the proceedings before the BLA, the IPO issued Certificates of
Registration in favor of the respondent for the marks "ON A BAMBOO TRAY," "ELARS LECHON"
and "ROASTED PIG DEVICE," respectively. Said Certificates are valid for a period of 10 years from
their respective dates of issuance.
The IPO (Intellectual Property Office) Director General reversed the BLA. He stated that there was no
need for a written assignment of the subject trademarks because the spouses Lontoc themselves, in their
desire to leave a legacy, incorporated and registered respondent with the SEC.
The CA affirmed the ruling of IPO Director General. The CA noted that the IPO had already issued
the respondent Certificates of Registration for the subject trademarks. These Certificates of
Registration carry with them the operation of ownership and exclusive use of the subject trademarks.
Consequently, the CA found the petitioner liable for infringement. It applied the dominancy test and
held that the petitioner's use of the mark "ELARZ LECHON" or "ELAR LECHON" likely results in
confusion. The marks both feature the name "ELAR"; have a similar sound and pronunciation with the
respondent's trademarks; and are likewise used in the sale of lechon and related products. Thus, there
exists a likelihood that the consumers will mistakenly associate petitioner's lechon and business with
those of respondent's. Moreover, the CA held petitioner liable for unfair competition. It explained that
petitioner's use of the marks "ELARZLECHON," "ELAR LECHON," "PIG DEVICE," and "ON A
BAMBOO TRAY" on its packaging materials and signages has clothed its goods with the general
appearance of respondent's products. Worse, petitioner did not issue a notice to the buying public that
"ELARZ LECHON" is not respondent's product. Hence, petitioner's intent to deceive the public is
clear.
ISSUE: Whether the respondent has the right to the exclusive use of the trademark. (YES.)
RULING:
Trademark
A mark pertains to "any visible sign capable of distinguishing the goods (trademark) or services (service
mark) of an enterprise and shall include a stamped or marked container of goods." Particularly, a
trademark is "any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof,
adopted and used by a manufacturer or merchant on his goods to identify and distinguish them from
those manufactured, sold, or dealt by others." A trademark is an intellectual property that deserves
protection under the law.
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On this score, the Intellectual Property Code (IP Code) states how a mark is obtained and, correlatively,
enumerates the rights of a trademark owner:
Section 122. How Marks are Acquired. - The rights in a mark shall be acquired through
registration made validly in accordance with the provisions of this law.
x x x x
Section 147. Rights Conferred. - 147.1. The owner of a registered mark shall have the
exclusive right to prevent all third parties not having the owner's consent from using in the
course of trade identical or similar signs or containers for goods or services which are identical
or similar to those in respect of which the trademark is registered where such use would result in
a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a
likelihood of confusion shall be presumed.
xxxx
In the recent case of Zuneca Pharmaceutical, et al. v. Natrapharm, Inc., the Court exhaustively discussed
the manner of acquiring ownership of a particular trademark which, over the years, vacillated between
registration and actual use.
Essentially, Zuneca clarified that, as the rule now stands, the lawful owner of the mark shall be the person
or entity who first registers it in good faith: Once the IP Code took effect, however, the general rule on
ownership was changed and repealed. At present, as expressed in the language of the provisions of the
IP Code, prior use no longer determines the acquisition of ownership of a mark in light of the adoption
of the rule that ownership of a mark is acquired through registration made validly in accordance with
the provisions of the IP Code. Accordingly, the trademark provisions of the IP Code use the term
"owner" in relation to registrations. This fact is also apparent when comparing the provisions of the
Trademark Law, as amended, and the IP Code, x x x.
It must be noted that respondent filed applications for the registration of the subject trademarks "ON
A BAMBOO TRAY," "ELARS LECHON" and "ROASTED PIG DEVICE." Recognizing their
ownership of the said marks, the IPO granted the respondent Certificates of Registration on February
10, 2005, April 28, 2006, and October 2, 2006, valid for a period of 10 years. Indeed, the registration of
the marks gives rise to a presumption of the validity of registration, the registrant's ownership of the
marks, and the right to its exclusive use. Petitioner failed to overcome said presumption. Furthermore,
according to the database of the IPO, the respondent's right to use the subject trademarks has been
renewed for another 10 years. Thus, as of date, the respondent unequivocally enjoys the exclusive right
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to use the subject trademarks.
It likewise bears stressing that even prior to the registration of the subject trademarks, the respondent
has been consistently using said marks since its incorporation in 1989. Hence, even under the law
applicable at that time, namely, Section 2-A of R.A. No. 166, respondent's consistent use of the subject
trademarks confirms its ownership thereof.
Trademark is owned by respondent company
It cannot be gainsaid that respondent corporation is a creation of the spouses Lontoc themselves. In
1989, the spouses Lontoc wanted to leave their legacy, and thus incorporated the respondent to ensure
the continuation of their lechon and food business. From that moment, the spouses Lontoc transferred
to the respondent the ownership of ELARS Lechon and the subject marks in connection with the sale
of its roasted pigs and other products. Moreover, all throughout their lives, the spouses Lontoc actively
managed respondent and consistently used the subject trademarks in promoting the latter's goods.
Certainly, the spouses Lontoc's overt acts of incorporating respondent, actively managing it, and
consistently representing to the public that ELARS Lechon is operating under the respondent,
conclusively prove that indeed the "ELARS LECHON" brand has been transferred to, and is owned by
respondent. As such, the respondent has the exclusive right to use the name ELARS LECHON to the
exclusion of all other parties, including the descendants of the spouses Lontoc.
Damages
The Court finds that petitioner's use of the marks "ELARZ LECHON," "ELAR LECHON," "PIG
DEVICE," and "ON A BAMBOO TRAY," which are substantially identical to the respondents' marks,
constitute unfair competition.
Here, petitioner's product is lechon which is also the product of respondent. Since petitioner uses
"ELARZ LECHON", "ELAR LECHON", "PIG DEVICE", and "ON A BAMBOO TRAY" on their
packaging materials and signages in the same manner like respondent uses "ELAR'S LECHON" mark
on its lechon products, petitioner has obviously clothed its product the general appearance of
respondent's product itself. More, there is no notice to the buying public that "ELARZ LECHON" is
not respondent's product, albeit it is the latter that has the exclusive right to the trademark "ELAR'S
LECHON." There is indeed a clear intent to deceive the public on petitioner's part.
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Remarkably, in UFC Philippines, Inc. v. Barrio Fiesta Manufacturing Corporation, the Court
enumerated the kinds of confusion caused by similar marks, and the tests that aid in determining the
likelihood of confusion:
There are two tests used in jurisprudence to determine likelihood of confusion, namely the dominancy
test used by the IPO, and the holistic test adopted by the Court of Appeals. In Skechers, U.S.A., Inc. v.
Inter Pacific Industrial Trading Corp., we held:
The essential element of infringement under R.A. No. 8293 is that the infringing mark is likely to cause
confusion. In determining similarity and likelihood of confusion, jurisprudence has developed tests -
the Dominancy Test and the Holistic or Totality Test. The Dominancy Test focuses on the similarity
of the prevalent or dominant features of the competing trademarks that might cause confusion, mistake,
and deception in the mind of the purchasing public. Duplication or imitation is not necessary; neither
is it required that the mark sought to be registered suggests an effort to imitate. Given more
consideration are the aural and visual impressions created by the marks on the buyers of goods, giving
little weight to factors like prices, quality, sales outlets, and market segments.
Applying the dominancy test to the case at bar, it is very obvious that the petitioner's marks "ELARZ
LECHON" and "ELAR LECHON" bear an indubitable likeness with respondent's "ELARS
LECHON." As can easily be seen, both marks use the essential and dominant word "ELAR". The only
difference between the petitioner's mark from that of respondent's are the last letters Z and S,
respectively. However, the letters Z and S sound similar when pronounced. Thus, both marks are not
only visually similar, but are phonetically and aurally similar as well. To top it all off, both marks are
used in selling lechon products. Verily, there exists a high likelihood that the consumers may conclude
an association or relation between the products. Likewise, the uncanny resemblance between the marks
may even lead purchasers to believe that the petitioner and respondent are the same entity.
In fine, petitioner's use of marks similar to those of the respondent's constitutes a violation of the latter's
intellectual property rights. It is high time for petitioner to desist from conveniently latching on to the
good will and reputation built by the respondent over the years.
13. VICTORIO P. DIAZ VS PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS

G.R. No. 180677, Feb. 18, 2013
Student Assigned: SANTOS
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Topic under the Syllabus: Trademark Infringement and Unfair Competition
DOCTRINE: It is the tendency of the allegedly infringing mark to be confused with the registered
trademark that is the gravamen of the offense of infringement of a registered trademark. The acquittal of
the accused should follow if the allegedly infringing mark is not likely to cause confusion. Thereby, the
evidence of the state does not satisfy the quantum of proof beyond reasonable doubt.
FACTS: Levi Strauss and Company Levi’s (Levi’s), a foreign corporation based in the state of Delaware,
had been engaged in the apparel business. It is the owner of the TRADEMARKS and DESIGNS of
LEVI’s Jeans.
(1) the leather patch showing two horses pulling a pair of pants;
(2) the arcuate pattern with the inscription "LEVI STRAUSS & CO;"
(3) the arcuate design that refers to "the two parallel stitching curving
downward that are being sewn on both back pockets of a Levi’s Jeans;" and
(4) the tab or piece of cloth located on the structural seam of the right back
pocket, upper left side.
All these trademarks were registered in the Philippine patent office in 1970,’80’s and early part of 1990’s.
Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of Levi’s. after receiving information that
diaz was selling counterfeit Levi’s 501 jeans in las pinas, Levi’s Philippines hired investigators to verify.
Surveillance and the purchase of jeans from the tailoring shops of DIAZ made it clear that the jeans
bought from the tailoring shops of Diaz were counterfeit or imitations of LEVI’S. 501.
Thru the help of NBI, applying search warrant in due course against Diaz to be served at his tailoring
shops. Agents from NBI searched the tailoring shops of Diaz and seized several fake Levi’s 501 jeans
from them. Levi’s Philippines claimed that it did not authorize the making and selling of the seized jeans.
That each jeans could be mistaken for original LEVI’S 501 jeans due to the placement of the arcuate,
tab, and 2-horse leather patch.
Respondent admitted that he is the owner of the shop searched by the NBI Agent. It also contended
that he used the label “LS jeans tailoring” in the jeans that he made and sold. And that such label is
registered with the Intellectual property Office (IPO). That since the time his shops began operating in
1992, he had received no notice or warning regarding his operations; that the jeans he produced were
easily recognizable because the label “LS jeans tailoring” and the names of the customers were placed
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inside the pockets, and each of the jeans had an “LSJT” red tab; that “LS” stood for “latest style” and
that the leather patch on his jeans had 2 buffaloes, not 2 horses.
RTC: Found diaz Guilty in violating sec 155 sec 170 of RA 8293
CA: dismissed the appeal on the ground that Diaz had not filed his appellant’s brief on time despite
being granted his requested several extension periods.
ISSUE: Whether there is an infringement in violation of RA 8293
RULING: Remedies; Infringement. — Any person who shall, without the consent of the owner of
the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable
imitation of a registered mark or the same container or a dominant feature
thereof in connection with the sale, offering for sale, distribution,
advertising of any goods or services including other preparatory steps
necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to
deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark
or a dominant feature thereof and apply such reproduction, counterfeit,
copy or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used in commerce upon or in
connection with the sale, offering for sale, distribution, or advertising of
goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive, shall be liable in a civil action
for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts
stated in Subsection 155.1 or this subsection are committed regardless of
whether there is actual sale of goods or services using the infringing material.
The Elements of the offense of trademark infringement under the IPC are:
1. The trademark being infringed is registered in the IPO.
2. The trademark is reproduced, counterfeited, copied, or colorably imitated by the infringer
3. The infringing mark is used in connection with the sale, offering for sale, or advertising of
any goods, business or services or the infringing mark is applied to labels, signs, prints,
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packages, wrapper, receptables or advertisements intended to be used upon or in connection
with such goods, business or services.
4. The use or application of the infringing mark is likely to cause confusion or mistake or to
deceive purchasers or others as to the goods or services themselves or as to the source or
origin of such goods or services or the identity of such business. And
5. The use or application of the infringing mark is without the consent of the trademark owner
or the assignee thereof.
The likelihood of confusion is the GRAVAMEN of the offense of trademark infringement. There are
two tests for the determination of confusion: 1. Dominancy test; and 2. Holistic test.
The dominancy test focuses on the similarity of the main, prevalent or essential features of the
competing trademarks that might cause confusion. Infringement takes place when the competing
trademark contains the essential features of another. Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels and packaging, in determining
confusing similarity. The focus is not only on the predominant words but also on the other features
appearing on the labels.
The products involved in the case at bar are various kinds of jeans. The casual buyer is predisposed to be
more cautious and discriminating in and would prefer to mull over his purchase. Confusion and
deception, then, is less likely.
Diaz used the trademark “ls jeans tailoring” for the jeans he produced and sold in his tailoring shops. His
trademark was visually and aurally different from the trademark “levi strauss and Co” appearing on the
patch of original jeans under the trademark LEVI’s 501. The word “LS” could not be confused as a
derivative from “levi strauss” by virtue of the “LS” being connected to the word “tailoring”, thereby
openly suggesting that the jeans bearing the trademark “ls jeans tailing” came or were bought from the
tailoring shops of Diaz, not from the malls or boutiques selling original LEVI’s 501 jeans to the public.
Therefore, there is no infringement violation of RA 8293.
14. ASIA PACIFIC RES. INT’L HOLDINGS, LTD. VS. PAPERONE, INC.
G.R. Nos. 213365-66, Dec. 10, 2018.
Ponente: GESMUNDO, J.
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Student Assigned: PAVIA
DOCTRINE: There is unfair competition if the following elements are present: (1) there is confusing
similarity in the general appearance of the goods, and (2) there is intent to deceive and defraud a
competitor. Moreover, confusing similarity may result from other external factors in the packaging or
presentation of goods.
FACTS: Petitioner Asia Pacific Resource International Holdings, LTD (APRIL, for brevity) is engaged
in the production and sale of pulp and premium wood free paper.
It alleged that it is the owner of a trademark known as “PAPER ONE” with a Certificate of Registration.
Further, they contend that said trademark is enjoyed legal protection in different countries worldwide
and enjoyed goodwill and high reputation because of their aggressive marketing and promotion.
Petitioner claims that the use of “PAPERONE” in Respondent’s corporate name [Paperone, Inc]
without its prior consent and authority was done in bad faith and designed to unfairly ride on its good
name and to take advantage of its goodwill. That it was calculated to mislead the public into believing
that respondent’s business and products were manufactured, licensed or sponsored by petitioner.
On the other hand, Respondent averred that it had no obligation to secure prior consent from petitioner
to adopt and use its corporate name because the DTI and the SEC allowed it to use “Paperone, Inc.” as
its corporate name. Thereby negating any violation on petitioner’s alleged prior rights. Since “Paperone,
Inc” is registered with the SEC and its business name was likewise registered with the DTI.
Respondent also denied any awareness of the existence of petitioner or registration of “PAPER ONE”,
as the latter is a foreign corporation not doing business in the Philippines.
While the business of respondent dealt with paper conversion such as manufacture of table napkins,
notebooks and intermediate/collegiate writing pads, it did not use its corporate name PAPERONE on
any of its products. Further, its products had been widely sold in the Philippines even before petitioner
could claim any business transaction in the country. The public could not have possibly been deceived
into believing that any relation or sponsorship existed between the parties, considering these
circumstances.
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BLA: found respondent liable for unfair competition.
CA: reversed the decision of the BLA and ruled that there was no confusing similarity in the general
appearance of the goods of both parties. Petitioner failed to establish through substantial evidence that
respondent intended to deceive the public or to defraud petitioner. Thus, the essential elements of
unfair competition were not present.
ISSUE: Whether the respondent is liable for unfair competition. (YES.)
RULING: According to the SC, there is unfair competition if the following elements are present: (1)
there is confusing similarity in the general appearance of the goods, and (2) there is intent to deceive and
defraud a competitor. Moreover, confusing similarity may result from other external factors in the
packaging or presentation of goods.
Here, “PAPER ONE” and “Paperone, Inc.” both have the same spelling and are pronounced the same.
A careful scrutiny of the mark shows that the use of PAPERONE by respondent would likely cause
confusion or deceive the ordinary purchaser, exercising ordinary care, into believing that the goods
bearing the mark are products of one and the same enterprise.
The court also discussed the two types of confusion and the following are: (1) Confusion of Goods
(product confusion) when the products are competing and the purchaser would be induced to purchase
one product in the belief that he was purchasing the other; and (2) Confusion of Business (source or
origin confusion), when the products are non-competing but related enough to produce confusion of
affiliation.
The BLA ruled that “to permit Paperone, Inc. to continue to use its corporate name, although not used
as label for its paper products, but is in the same line of business, that of manufacturing paper products,
their coexistence would result in confusion as to the source of goods and diversion of sales to respondent
knowing that purchasers are getting products from APRIL with the use of the corporate name PAPER
ONE, Inc. or Paperone, Inc. by herein respondent.
15. PROSEL PHARMACEUTICALS & DISTRIBUTORS, INC. VS. TYNOR DRUG

HOUSE, INC.
G.R. No. 248021 September 30, 2020.
174
Student Assigned: GONZALES, ANNE
DOCTRINE: The determining point in trademark infringement is a likelihood confusion.
FACTS: This case involves a complaint for trademark infringement filed by Tynor Drug House, Inc.
against Prosel Pharmaceuticals. Both parties are pharmaceutical companies.
Tynor Drug House, Inc. (Tynor) secured a trademark registration on its mark CHERIFER on July 8,
2004. On the other hand, Prosel Pharmaceuticals (Prosel) had been using the mark CEEGEEFER,
which is an improved version of its previous product, Selvon-C. Both products are over-the-counter
multivitamins promoting growth for children.
Prosel received Tynor’s demand letter requiring the former to: (1) stop distributing CEEGEEFER
products; (2) recall CEEGEEFER products that were already distributed; and (3) execute an
undertaking to stop using or imitating Tynor’s trademark and design. The demand letter claimed that
CEEGEEFER was confusingly similar to Tynor’s multivitamin product, CHERIFER.
Prosel differentiates the two products. According to Prosel, the products are not used in the sale of the
same goods: CEEGEEFER is a drug with vitamin C and CGF as its components while CHERIFER is
only a multivitamin without a vitamin C component.
Prosel insists that CEEGEEFER and CHERIFER are still not confusingly similar because the logos are
different. While both logos show a boy wearing a basketball jersey and cap doing a slam dunk, Prosel
enumerates the variances between the two logos, viz.:
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ISSUE: Whether Prosel Pharmaceuticals is guilty of trademark infringement. (YES.)
RULING: The determining point in trademark infringement is a likelihood of confusion. In the case
of ABS-CBN Publishing, Inc. v. Director of Bureau of Trademarks, This Court acknowledged how "in
committing the infringing act, the infringer merely introduces negligible changes in an already registered
mark, and then banks on these slight differences to state that there was no identity or confusing
similarity, which would result in no infringement." Given the respective packages of CHERIFER and
CEEGEEFER shown above, it is indubitable that the two products are strikingly similar.
Both products are over-the-counter multivitamins that do not require a medical prescription. As such,
CEEGEEFER and CHERIFER may be easily obtained without the advice of another person.
Therefore, the parties' target market may be confused, mistaken, or deceived into thinking that
CEEGEEFER is the same as CHERIFER. Note, too, that different drug stores even displayed and sold
CEEGEEFER and CHERIFER products beside each other.
Given the phonetic and visual similarities between the two products (i.e., how the product names are
spelled, the sound of both product names, and the colors and shapes combination of the products'
respective packaging), it is obvious that Prosel attempted to pass CEEGEEFER as a colorable imitation
of CHERIFER.
16. SAN MIGUEL PURE FOODS CO., INC. VS. FOODSPHERE, INC.
G.R. Nos. 217781 & 217788, June 20, 2018
Student Assigned: MANGANDI
DOCTRINE: The essential elements of an action for unfair competition are: (1) confusing similarity in
the general appearance of the goods; and (2) intent to deceive the public and defraud a competitor. The
confusing similarity may or may not result from similarity in the marks, but may result from other
external factors in the packaging or presentation of the goods. The intent to deceive and defraud may be
inferred from the similarity of the appearance of the goods as offered for sale to the public.
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The question to be determined is whether or not, as a matter of fact, the name or mark used by the defendant
has previously come to indicate and designate plaintiffs goods, or, to state it in another way, whether
defendant, as a matter of fact, is, by his conduct, passing off defendant's goods as plaintiffs goods or his
business as plaintiffs business.
FACTS: Parties are both engaged in the business of the manufacture, sale, and distribution of food
products, with SMPFCI owning the trademark "PUREFOODS FIESTA HAM" while Foodsphere,
Inc. products (Foodsphere) bear the "CDO" brand.
SMPFCI filed a Complaint for trademark infringement and unfair against Foodsphere before the
Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO) pursuant to Sections 155 and
168 of Republic Act (R.A.) No. 8293, otherwise known as the Intellectual Property Code (IP Code), for
using, in commerce, a colorable imitation of its registered trademark in connection with the sale,
offering for sale, and advertising of goods that are confusingly similar to that of its registered trademark.
The striking similarities between the marks and products of Foodsphere with those of SMPFCI warrant
its claim of trademark infringement on the ground of likelihood of confusion as to origin, and being the
owner of "FIESTA," it has the right to prevent Foodsphere from the unauthorized use of a deceptively
similar mark. The word "PISTA" in Foodsphere's mark means "fiesta," "feast," or "festival" and connotes
the same meaning or commercial impression to the buying public of SMPFCI's "FIESTA" trademark.
SMPFCI further alleged that Foodsphere is guilty of unfair competition since there is confusing
similarity in the general appearance of the goods of the parties and intent on the part of Foodsphere, to
deceive the public and defraud SMPFCL.
Foodsphere denied the charges of trademark infringement and countered that the marks "PISTA" and
"PUREFOODS FIESTA HAM" are not confusingly similar and are, in fact, visually and aurally distinct
from each other.
ISSUE: Whether Foodsphere's use of the "PISTA" mark and packaging constitutes trademark
infringement and unfair competition. (YES.)
RULING: The essential elements of an action for unfair competition are: (1) confusing similarity in
the general appearance of the goods; and (2) intent to deceive the public and defraud a competitor. The
confusing similarity may or may not result from similarity in the marks, but may result from other
external factors in the packaging or presentation of the goods. The intent to deceive and defraud may be
inferred from the similarity of the appearance of the goods as offered for sale to the public.
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Foodsphere's packaging in its entirety, and not merely its "PISTA" mark thereon, renders the general
appearance thereof confusingly similar with the packaging of SMPFCI's ham, that would likely
influence purchasers to believe that these products are similar, if not the same, as those of SMPFCI.
The question to be determined is whether or not, as a matter of fact, the name or mark used by the
defendant has previously come to indicate and designate plaintiffs goods, or, to state it in another way,
whether defendant, as a matter of fact, is, by his conduct, passing off defendant's goods as plaintiffs
goods or his business as plaintiffs business.
17. KHO VS. SUMMERVILLE GEN. MERCHANDISING & CO., INC.

G.R. No. 213400, August 4, 2021.
Student Assigned: ALIPIO
DOCTRINE: The essential elements of an action for unfair competition are: (1) confusing similarity in
the general appearance of the goods, and (2) intent to deceive the public and defraud a competitor.
The confusing similarity may or may not result from similarity in the marks, but may result from other
external factors in the packaging or presentation of the goods. Likelihood of confusion of goods or business is
a relative concept, to be determined only according to peculiar circumstances of each case. The element of
intent to deceive and to defraud may be inferred from the similarity of the appearance of the goods as
offered for sale to the public.
FACTS: Petitioners Elidad Kho (Elidad) and Violeta Kho (Violeta) were charged with Unfair
Competition by respondent Summerville General Merchandising & Co., Inc., (Summerville) before the
City Prosecutor's Office of Manila. It is alleged that on or about January 10, 2000, petitioners, under
the business name KEC Cosmetic Laboratory, engaged in unfair competition when it sold to the public
facial cream products similar to the general appearance of Chin Chun Su, a product of Summerville
General Merchandising and Co. The Regional Trial Court arrived at the conclusion that no probable
cause exists to hold the accused for trial for unfair competition. The RTC found that the accused never
deceived the public into believing that the medical facial cream that they sold which is contained in a
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pink oval-shaped container with trademark of "Chin Chun Su” were the same as those being imported
by respondent Summerville; and petitioners acted in good faith without intent to deceive the public.
On the other hand, the CA reversed the Decision of the lower court and ruled that the petitioners'
product is confusingly similar to that of respondent. Moreover, the ordinary purchaser would not
normally inquire about the manufacturer of the product and therefore, petitioners' act of labelling their
product with the manufacturer's name would not exculpate them from liability, especially as both
products of petitioners and respondent bore the name "Chin Chun Su," in oval shaped containers.
Furthermore, the petitioners may have the right to use the oval-shaped container for their medicated
facial cream but the mark "Chin Chun Su" imprinted thereon is beyond the authority of petitioners'
copyright and patent registration.
ISSUE: Whether there is probable cause to charge the petitioners with Unfair Competition. (YES.)
RULING: In relation to Section 168 (3a) of the Intellectual Property Code, the essential elements of
an action for unfair competition are: (1) confusing similarity in the general appearance of the goods, and
(2) intent to deceive the public and defraud a competitor.
The confusing similarity may or may not result from similarity in the marks, but may result from other
external factors in the packaging or presentation of the goods. Likelihood of confusion of goods or
business is a relative concept, to be determined only according to peculiar circumstances of each case.
The element of intent to deceive and to defraud may be inferred from the similarity of the appearance
of the goods as offered for sale to the public.
Here, petitioners' product which is a medicated facial cream sold to the public is contained in the same
pink oval-shaped container which had the mark "Chin Chun Su," as that of respondent. While
petitioners indicated in their product the manufacturer's name, the same does not change the fact that
it is confusingly similar to respondent's product in the eyes of the public. As aptly
found by the appellate court, an ordinary purchaser would not normally inquire about the
manufacturer of the product. Petitioners' product and that solely distributed by respondent are similar
in the following respects: 1.both are medicated facial creams; 2. both are contained in pink, oval-shaped
containers; and 3. both contain the trademark "Chin Chun Su". The similarities far outweigh the
differences.
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The general appearance of the petitioner’s product is confusingly similar to the product of the
respondent. Verily, the acts complained of against petitioners constituted the offense of Unfair
Competition and probable cause exists to hold them for trial
18. PETRON CORPORATION AND PEOPLE OF THE PHILIPPINES V. WILLIAM YAO,

SR.
G.R. No. 243328, March 18, 2021.
Ponente: PERALTA, C.J.
Student Assigned: PEPINGCO
DOCTRINE: The Supreme Court explains that Unfair Competition is characterized as a

continuing offense because of the very nature of the crime.
FACTS:
1. Petron Corporation is one of the bulk suppliers of Liquified Petroleum Gas (LPG) in the
Philippines. It uses the trademark “GASUL” for its LPG products.
2. It is also the only entity in the Philippines authorized to refill, use, sell, and distribute Petron
Gasul LPG containers.
3. Petron has been notified that some establishments were engaged in unauthorized refilling, sale,
and distribution of Petron-owned Gasul LPG cylinders. One of those identified was Masagana
Gas Corporation (Masagana).
4. Petron engaged the services of Bernabe Alajar of Able Research and Consulting Services, Inc.
for the investigation of the reported violations, and turned the findings over to the NBI for
investigation.
5. Due to this, a discreet surveillance operation on Masagana’s refilling plant was conducted, where
the agents executed a test-buy.
6. The agents witnessed Masagana employees refilling Petron LPG Gasul cylinders and selling the
same to the agents. Cash invoices were issued from the sale.
7. NBI agents later followed a ten-wheeler truck owned by Masagana, carrying Petron Gasul LPG
cylinders from its refilling plant in Trece Martires, Cavite to its warehouse in Makati City.
There, they found another four-wheeler truck containing Petron Gasul LPG cylinders parked
in front of the warehouse.
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8. NBI agents were prompted to apply for search warrants before the RTC of Cavite and Makati
against William Yao, Sr. (Yao) and others for violation of Section 155 in relation to Section
170 of R.A. No. 8293. (Intellectual Property Code of the Philippines)
9. The DOJ - Task Force on Intellectual Property Piracy issued a resolution, recommending the
filing of 2 separate pieces of Information for violation of Section 168.3 in relation to Section
170 of R.A No. 8293.
10. Thus, the following were filed:
a. RTC Trece Martires - Information for violation of Sec. 168 in relation to Sec. 170.
b. RTC Makati - Information for violation of Sec. 155 in relation to Sec. 170.
11. Yao and other private respondents filed a Motion to Quash based on several grounds including
lack of jurisdiction. However, this was denied.
12. This prompted Yao and other private respondents to file an Urgent Motion to Dismiss,
contending that the two separate informations filed in the different courts contain the same set
of facts, alleged identical acts, all producing one continuing offense, necessitating the filing of
just one information.
13. Further, since the information for Unfair Competition was first filed in Trece Martires, then it
has already obtained exclusive jurisdiction over the case, which would necessitate the exclusion
of Makati from acquiring jurisdiction.
14. Makati RTC denied the Urgent Motion to Dismiss since the issue on jurisdiction has already
been resolved in the previous denial of the Motion to Quash.
15. Lastly, Yao and other private respondents filed for a Motion for Reconsideration, which was
granted, giving way to the granting of the previous Motion to Quash. This was elevated to the
Court of Appeals on certiorari. The CA merely affirmed the lower court’s ruling.
ISSUE: Whether the crime of Unfair Competition is a continuing crime. (YES.)
RULING:
1. The Supreme Court explains that Unfair Competition is characterized as a continuing
offense because of the very nature of the crime. Section 168 of Republic Act No. 8293, known
as the Intellectual Property Code of the Philippines, describes the acts constituting the crime of
unfair competition:
SECTION 168. Unfair Competition, Rights, Regulation and Remedies. ‑ 168.1.

A person who has identified in the mind of the public the goods he manufactures or
deals in, his business or services from those of others, whether or not a registered mark
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is employed, has a property right in the goodwill of the said goods, business or services
so identified, which will be protected in the same manner as other property rights.
168.2. Any person who shall employ deception or any other means contrary to good
faith by which he shall pass off the goods manufactured by him or in which he deals, or
his business, or services for those of the one having established such goodwill, or who
shall commit any acts calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.
168.3. In particular, and without in any way limiting the scope of protection against
unfair competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of goods
of another manufacturer or dealer, either as to the goods themselves or in the wrapping
of the packages in which they are contained, or the devices or words thereon, or in any
other feature of their appearance, which would be likely to influence purchasers to
believe that the goods offered are those of a manufacturer or dealer, other than the actual
manufacturer or dealer, or who otherwise clothes the goods with such appearance as
shall deceive the public and defraud another of his legitimate trade, or any subsequent
vendor of such goods or any agent of any vendor engaged in selling such goods with a
like purpose; xxx
2. Further, jurisprudence explains that unfair competition has been defined as the passing off (or
palming off) or attempting to pass off upon the public of the goods or business of one person
as the goods or business of another with the end and probable effect of deceiving the public.
3. Passing off (or palming off) takes place where the defendant, by imitative devices on the general
appearance of the goods, misleads prospective purchasers into buying his merchandise under
the impression that they are buying that of his competitors. Thus, the main element of unfair
competition is passing off and one way of committing the crime is by sale.
4. As can be seen from the complaint, the Petron owned Gasul tanks were allegedly refilled by
respondents at their Trece Martires City refilling plant and were sold therein. Thus, the crime
of unfair competition was already consummated in Trece Martires City.
5. However, respondents continued to pass off the Petron Gasul tanks as their own by
subsequently selling the same in Makati City, hence, there is a continuing violation of
the law. Therefore, the sales made in Cavite and Makati City cannot be considered as
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separate offenses of unfair competition as they merely constitute the ingredients of the
crime.
6. In transitory or continuing offenses in which some acts material and essential to the crime and
requisite to its consummation occur in one province and some in another, the court of either
province has jurisdiction to try the case. Here, both the RTC of Cavite and Makati City
have jurisdiction to try the case for unfair competition filed against respondents.
7. However, it has been held that in cases of concurrent jurisdiction, the court first acquiring
jurisdiction excludes the other courts. Since it is the RTC of Trece Martires City, Cavite which
had earlier acquired jurisdiction over the case of unfair competition filed against respondents,
the RTC of Makati City correctly quashed the Information filed with it for lack of jurisdiction.
8. Lastly, the Court explains that the crime of unfair competition is a continuing crime and cannot
be considered as delito continuado. Citing Santiago v. Hon. Justice Garchitorena:
xxx for delito continuado to exist there should be a plurality of acts performed during a
period of time; unity of penal provision violated; and unity of criminal intent or
purpose, which means that two or more violations of the same penal provisions are
united in one and same intent or resolution leading to the perpetration of the same
criminal purpose or aim.
According to Guevarra, in appearance, a delito continuado consists of several crimes but

in reality there is only one crime in the mind of the perpetrator. xxx
9. Here, respondents did not commit on the same occasion several acts of passing off their gas tanks
as that of Petron or other parties. Rather, respondents only continued or repeated the alleged
singular crime committed in Cavite and all the way up to Makati.
10. Hence, unfair competition does not fall under the criterion of a delito continuado. And there are
also no two separate crimes of unfair competition allegedly committed by respondents.
Full discussion on continuing crime v. delito continuado:

The crime of unfair competition is a continuing crime and cannot be considered as delito continuado.
In Santiago v. Hon. Justice Garchitorena, we discussed the concept of delito continuado or continuous
or continued crimes, to wit:
It should be borne in mind that the concept of delito continuado has been a vexing problem in
Criminal Law - difficult as it is to define and more difficult to apply.
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According to Cuello Caton, for delito continuado to exist there should be:
1. a plurality of acts performed during a period of time;
2. unity of penal provision violated; and
3. unity of criminal intent or purpose, which means that two or more violations of the
same penal provisions are united in one and same intent or resolution leading to the
perpetration of the same criminal purpose or aim.
According to Guevarra, in appearance, a delito continuado consists of several crimes but in

reality there is only one crime in the mind of the perpetrator.
Padilla views such offense as consisting of a series of acts arising from one criminal intent or
resolution.
Applying the concept of delito continuado, we treated as constituting only one offense the
following cases:
(1) The theft of 13 cows belonging to two different owners committed by the accused
at the same place and at the same period of time.
(2) The theft of six roosters belonging to two different owners from the same coop and
at the same period of time.
(3) The theft of two roosters in the same place and on the same occasion.
(4) The illegal charging of fees for services rendered by a lawyer every time he collects
veteran's benefits on behalf of a client, who agreed that the attorney's fees shall be paid
out of said benefits. The collection of the legal fees were impelled by the same motive,
that of collecting fees for services rendered, and all acts of collection were made under
the same criminal impulse.
On the other hand, we declined to apply the concept to the following cases:
(1) Two estafa cases, one of which was committed during the period from January 19 to
December 1955 and the other from January 1956 to July 1956. The said acts were
committed on two different occasions.
(2) Several malversations committed in May, June and July, 1936, and falsifications to
conceal said offenses committed in August and October 1936. The malversations and
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falsifications "were not the result of only one purpose or of only one resolution to
embezzle and falsify xxx."
(3) Two estafa cases, one committed in December 1963 involving the failure of the
collector to turn over the installments for a radio and the other in June 1964 involving
the pocketing of the installments for a sewing machine.
(4) 75 estafa cases committed by the conversion by the agent of collections from
customers of the employer made on different dates. xxx
19. KOLIN ELECTRONICS CO, INC. V. KOLIN PHILS. INT’L, INC.

G.R. No. G.R. No. 228165 February 9, 2021
Student Assigned: PUNZALAN
DOCTRINE: Modern law recognizes that the protection to which the owner of a trademark is entitled is
not limited to guarding his goods or business from actual market competition with identical or similar
products of the parties, but extends to all cases in which the use by a junior appropriator of a trademark is
likely to lead to a confusion of service, as where prospective purchasers would be misled into thinking that
the complaining party has extended business into the field or in any way connected with the activities of the
infringer.
FACTS: In 1993, Kolin Electronics Industrial Supply (KEIS) filed a trademark application for
“KOLIN” covering the following products under Class 9: automatic voltage regulator, converter,
recharger, stereo booster, AC-DC regulated power supply, step-down transformer, and PA amplifier
AC-DC. He then executed a Deed of Assignment of Assets which includes the pending application of
registration of KOLIN mark in favor of Kolin Electronics Co., Inc. (KECI).
Taiwan Kolin Co., Ltd. (TKC) filed an opposition to KECI’s trademark application on the ground that
TKC also has a trademark application for “KOLIN” in 1996 covering the following products: "color
television, refrigerator, window-type air conditioner, splittype air conditioner, electric fan, and water
dispenser". In 2002, the Intellectual Property Office Bureau of Legal Affairs (IPO-BLA) ruled in favor
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of KECI, denying TKC’s opposition and giving due course to KECI’s trademark application for
KOLIN based on the discussion of the prior adopter and user of the mark. Upon appeal, the IPO-DG
sustained the ruling of IPO-BLA. The IPO eventually issued a Certificate of Registration for KOLIN
in favor of KECI. Upon review, the CA also ruled in favor of KECI. Thus, by virtue of this ruling (KECI
ownership case), KECI is the adjudicated owner of the KOLIN mark under the Trademark Law as
against TKC. However, in a 2015 case entitled Taiwan Kolin Corporation, Ltd. v. Kolin Electronics
Co., Inc. (Taiwan Kolin case), the Court gave due course to TKC's Trademark Application for KOLIN.
To recall, TKC had also filed in 1996 a trademark application for “KOLIN” which was considered
abandoned in April 18, 1999 but was revived in 2001. On September 11, 2006 - more than a month
after the promulgation of the KECI ownership case - KPII, an affiliate of TKC, filed trademark
application for the “KOLIN” mark under Class 9 covering "Televisions and DVD players". On June 12,
2007, KECI filed an opposition based on, among others, the fact that it is the registered owner of the
KOLIN mark and that the registration of KPII's kolin mark will cause confusion among consumers.
The IPO-BLA sustained KECI’s opposition which was affirmed by the IPO-DG. Upon appeal, the CA
granted KPII’s petition and held that KPII may register its mark for television sets and DVD players and
the doctrine of res judicata forbids it from arriving at a contrary conclusion. Hence, this petition
ISSUE: Whether KPII should be allowed to register its mark. (NO.)
RULING: KPII is not allowed to register its kolin mark for "Televisions and DVD players." The
Supreme Court held that: (1) there is resemblance between KECI's KOLIN and KPII's kolin marks; (2)
the goods covered by KECI's KOLIN are related to the goods covered by KPII's kolin; (3) there is
evidence of actual confusion between the two marks; (4) the goods covered by KPII's kolin fall within
the normal potential expansion of business of KECI; (5) sophistication of buyers is not enough to
eliminate confusion; (6) KPII's adoption of KECI's coined and fanciful mark would greatly contribute
to likelihood of confusion; and (7) KPII applied for kolin in bad faith. Thus, KPII's application for kolin
should be denied because it would cause likelihood of confusion and KECI's rights would be damaged.
It must be stressed that KECI was already declared as the owner of the mark under the Trademark Law.
Sec. 226 171 of the IP Code states that nothing in the IP Code shall adversely affect the rights of the
enforcement of marks acquired in good faith prior to the effective date of said law. As discussed in the
facts, the existence of likelihood of confusion is already considered as damage that would be sufficient
to sustain the opposition and rejection of KPII’s trademark application. Moreover, the Court likewise
stated that by granting this registration, KPII would acquire exclusive rights over the stylized version of
KOLIN for a range of goods/services or any related goods/services falling within the normal potential
expansions of KPII’s business. Owing to the peculiar circumstances of this case, this will effectively
amount to a curtailment of KECI's right to freely use and enforce the KOLIN word mark, or any stylized
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version thereof, for its own range of goods/services, especially against KPII, regardless of the existence
of actual confusion. Thus, based on Section 122 vis-a-vis Section 236 of the IP Code, the Court cannot
give due course to KPII's trademark application for "kolin".
A. Resemblance of marks. Considering the adoption of the Dominancy Test and the abandonment
of the Holistic Test, as confirmed by the provisions of the IP Code and the legislative deliberations, the
Court hereby makes it crystal clear that the use of the Holistic Test in determining the resemblance of
marks has been abandoned. The inapplicability of the Taiwan Kolin case in the case at bar is thus
evident. As correctly pointed out by Associate Justice Leonen, the Taiwan Kolin case used the Holistic
Test in evaluating trademark resemblance. This is improper precedent because the Dominancy Test is
what is prescribed under the law. Applying the Dominancy Test here, KPII's kolin mark resembles
KECI's KOLIN mark because the word "KOLIN" is the prevalent feature of both marks. Phonetically
or aurally, the marks are exactly the same. Surely, the manner of pronouncing the word "KOLIN" does
not change just because KPII's mark is in lowercase and contains an italicized orange letter "i". In terms
of connotation and overall impression, there seems to be no difference between the two marks. Another
consideration is the type of marks used. Logically, this may affect the determination of resemblance of
the marks in terms of their visual, aural, or connotative aspects, which are key areas to consider in using
the Dominancy Test. Using the persuasive logic in Cunningham together with the Dominancy Test,
there is no doubt that the minor differences between kolin and KOLIN mark should be completely
disregarded. The fact that KPII's trademark application possesses special characteristics (e.g., the
italicized orange letter "i") not present in KECI's KOLIN word mark makes no difference in terms of
appearance, sound, connotation, or overall impression because the "KOLIN" word itself is the subject
of KECI's registration.
B. Relatedness of Goods/Services. In assessing relatedness of goods/services to determine likelihood

of confusion, Mighty Corporation v. E. & J. Gallo Winery provides a list of factors that should be
considered, viz.:
Non-competing goods may be those which, though they are not in actual competition, are so related
to each other that it can reasonably be assumed that they originate from one manufacturer, in which
case, confusion of business can arise out of the use of similar marks. They may also be those which,
being entirely unrelated, cannot be assumed to have a common source; hence, there is no confusion
of business, even though similar marks are used. Thus, there is no trademark infringement if the
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public does not expect the plaintiff to make or sell the same class of goods as those made or sold by
the defendant. In resolving whether goods are related, several factors come into play: (a) the business
(and its location) to which the goods belong (b) the class of product to which the goods belong (c)
the product's quality, quantity, or size, including the nature of the package, wrapper or container
(d) the nature and cost of the articles (e) the descriptive properties, physical attributes or essential
characteristics with reference to their form, composition, texture or quality (f) the purpose of the
goods (g) whether the article is bought for immediate consumption, that is, day-to-day household
items (h) the fields of manufacture (i) the conditions under which the article is usually purchased
and j) the channels of trade through which the goods flow, how they are distributed, marketed,
displayed and sold. The Supreme Court also noted the abandonment of the use of product or service
classification as a factor in determining relatedness or non-relatedness. In this light, the
inapplicability of the Taiwan Kolin case as precedent in the instant controversy becomes all the more
apparent because it did not comprehensively consider all the jurisprudential factors in determining
relatedness and it included an inapposite discussion on subcategories in the NCL as an additional
rationale for its conclusion on non-relatedness. Clearly, the goods covered by KOLIN and kolin are
related, and this legal relatedness significantly impacts a finding of likelihood of confusion. In
addition to the factors in Mighty Corporation, another ground for finding relatedness of
goods/services is their complementarity. Applying this reasoning, the Supreme Court held that the
goods covered by KECI's KOLIN are complementary to the goods covered by KPII's kolin and
could thus be considered as related. This increases the likelihood that consumers will at least think
that the goods come from the same source. In other words, confusion of business will likely arise.
C. Actual Confusion. It is the Court's considered view that evidence of actual confusion should be
considered as strong evidence of likelihood of confusion, especially when there are concurrent findings
of resemblance of marks and/or relatedness of the goods/services. If "likelihood of confusion" is already
abhorred by the infringement provisions of the law and the evidence of likelihood of confusion already
creates basis to prevent another's use of its mark, it should logically follow that actual confusion should
be given more weight because confusion among consumers is not only speculated but has actually
transpired. Parenthetically, the presence of this criterion in ascertaining the existence of likelihood of
confusion in the multifactor test is yet another reason why the Taiwan Kolin case should not be held as
a binding precedent here. In the Taiwan Kolin case, while there was evidence of actual confusion
presented in the IPO-BLA, this was ultimately not considered in resolving the issue of likelihood of
confusion.
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D. Normal Potential Expansion of Business. The goods covered by KOLIN and kolin are related.
Therefore, it is likely that the goods covered by kolin falls within the normal potential expansion of
business of KECI.
E. Sophistication of the buyers. Ultimately, there is no need to speculate and imagine how an average
consumer would think and act in this hypothetical situation because, as discussed, there is actual proof
of confusion among consumers between the KOLIN and kolin goods. It is clear that consumers have
actually associated KPII's "KOLIN" - branded products with KECI's business. To be sure, that
consumers have complained about KPII's products and associated the quality of such products with
KECI's business shows that the concurrent use of "KOLIN" by KPII had already unfairly smeared
KECI's goodwill and reputation over its products.
F. Strength of the Mark. KECI's KOLIN mark is a fanciful or coined mark. Considering that it is
highly distinctive, confusion would be likely if someone else were to be allowed to concurrently use such
mark in commerce. What constitutes fraud or bad faith in trademark registration? Bad faith means that
the applicant or registrant has knowledge of prior creation, use and/or registration by another of an
identical or similar trademark. In other words, it is copying and using somebody else's trademark. Fraud,
on the other hand, may be committed by making false claims in connection with the trademark
application and registration, particularly on the issues of origin, ownership, and use of the trademark in
question among other things.
While KECI had squarely alleged the issue of KPII's bad faith, there was no explicit finding of bad faith
on the part of KPII in the decisions of the IPO-BLA, IPO-DG, and the CA. After an examination of
the records, however, the Court finds that circumstances in this case would lead a reasonable mind to
conclude that KPII knew about KECI's KOLIN registration when it made a trademark application for
kolin. First, there was a factual finding by the IPO-BLA that KPII is an instrumentality of TKC and
TKC directly participates in the management, supervision, and control of KPII. Second, as found by
the CA, KPII was authorized by TKC to use the "KOLIN" mark. Third, KPII filed a trademark
application for kolin barely two months after KECI was declared as the owner of the KOLIN mark.
Fourth, KECI and KPII may be considered as being in the same line of business and it would have been
highly improbable that KPII did not know an existing KOLIN mark owned by KECI, especially since
it is an affiliate of TKC. Notably, in the case of Birkenstock Orthopaedie GmbH and Co. KG v. Phil.
Shoe Expo Marketing Corp., the Court agreed with the IPO's finding that the party was in bad faith
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because it was in the same line of business and it was highly improbable for it to not know of the
existence of BIRKENSTOCK before it appropriated and registered this "highly distinct" mark.
20. GINEBRA SAN MIGUEL, INC. VS. DIRECTOR OF THE BUREAU OF TRADEMARKS
G.R. Nos. 196372, 210224, 216104 & 219632, August 9, 2022
Ponente: GESMUNDO, C.J.
Student Assigned: ROSARIO
DOCTRINE: The doctrine of foreign equivalents is not an absolute rule and should only be considered
as a guideline. Generally, a dictionary entry defining a word as a generic name of a class of products is
reasonable evidence that the public perceives said word as such. However, if any of the exceptions to the
doctrine of foreign equivalents exists, such as the alternate meaning of mark and marketplace
circumstances or the commercial setting in which the mark is used to demonstrate a different meaning,
then said doctrine shall not be applied.
FACTS: This case involves 3 cases.
The first case is an application filed by GSMI for the trademark Ginebra but the BOT, IPO and CA all
ruled against it on the ground that Ginebra is a generic term because Ginebra is the Spanish word for
Gin.
The second case involves a TRO filed by GSMI against Tanduay Distillers, basically arguing that
Tanduay should stop selling its products that bore the name Ginebra Kapitan because GSMI’s gin
products carried the name Ginebra, hence they are confusingly similar.
The last case involves the trademark application filed by Tanduay Distillers for Ginebra Kapitan which
was opposed by the GSMI, arguing that the mark Ginebra is exclusively used by GSMI and that Ginebra
has already acquired a secondary meaning. If Ginebra Kapitan will be allowed, there will be confusion
from the public that it is manufactured by GSMI.
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ISSUES:
1. Whether Ginebra is a generic term. (NO.)
2. Whether Ginebra may become a distinctive mark pursuant to the Doctrine of Secondary
Meaning. (YES.)
RULING:
1. The Court ruled that Ginebra is not a generic mark. In ruling so, the Court labored to explain how
Ginebra, despite being a Spanish translation for gin, is not a generic term.
Firstly, the Court emphasized that there are 4 categories of marks:

1. Fanciful or Arbitrary
2. Suggestive
3. Descriptive
4. Generic
Fanciful and Arbitrary marks enjoy the broadest protection from the law because they are distinct so as
to confuse the public, let alone have other competitors who will bear the same marks. Fanciful marks
are those that are not found in the dictionary. Like Kodak, it’s not a word in the dictionary but it is a
relative term in film or photos. Arbitrary marks are those that have ordinary meaning but are completely
unrelated to the goods and services on which they are applied. Like Apple, it's a fruit but it's a mark for
technological products.
Suggestive marks are also protectable as trademarks as they are terms that imply or suggest but do not
explicitly describe qualities or functions of a particular product or service. Like Family Bank, family and
banks do not have a relation to begin with but it suggests that it is a bank where family savings should
be deposited.
Descriptive marks are also protectable as trademarks but not as strong as the other two. This is because
these marks merely describe qualities, character or even place where it is manufactured or produced. Pale
Pilsen is a descriptive mark because it just defines the color of the pilsen, a beer originating from Pilsen
in Czechoslovakia. As such, Pale Pilsen cannot be registered for exclusive use.
However, the Doctrine of Secondary Meaning lets a mark be registered despite being a descriptive mark
by reason of long and exclusive use with reference to its article.
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Generic terms are the weakest among the terms and these cannot be registered because they are not
distinguishable. RA 8293 bars the registration and use of generic words as trademarks.
The Court then explained that genericness is ultimately determined by public perception. A word is
generic if the public sees the word as a general class of product. A word is not generic when the public
sees the producer, not the product. This is the primary significance test. The Court also ruled that a
generic term from the past may become a distinctive mark today because of public perception. This
happened to Singer, a generic mark for a type of sewing machine, but Singer is now a mark belonging to
Singer Manufacturing.
So to answer if Ginebra is a generic term, the Court first tackled the Doctrine of Foreign Equivalents.
Essentially, it is a principle that advocates resorting to dictionary translation in order to know whether a
foreign word is generic or not. A foreign word is considered to be generic with respect to a certain
product if the English translation concedes a generic meaning in relation to its product. A common term
from another country used to describe an item there should not be given trademark protection in
another. This was applied in the case of Lyceum of the Philippines where Lyceum meant University, a
generic mark, hence not subject to protection.
There are however exceptions to the Doctrine of Foreign Equivalents.
The first is Stop and Translate the Foreign Word - if an ordinary consumer would not stop and
translate the foreign word before buying the product, the doctrine finds no application. Moskovskaya
was allowed to be registered despite having a translation “from Moscow” because the consuming public
would not stop and translate such foreign words into English.
The second is Obscure and Dead Languages - the doctrine will not be applied if the language used is
highly obscure or already dead such as Latin.
The third is Alternate Meaning in the Marketplace and Commercial Setting - the doctrine will not
be applied if the foreign word has developed an alternate meaning in the marketplace that is different
from the translated meaning. Like Cordon Bleu which means Blue Ribbon but in the marketplace, it is
not generic because it is a well-known French culinary school.
Notably, the Doctrine of Foreign Equivalents will not apply when the relevant public has placed a
different or alternate meaning or assessment to a foreign word.
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Project Bookman
This is a survey that showed that 90% of the respondents in Greater Manila who consume gin, associated
the word Ginebra with GSMI.
Project Georgia
This survey showed that 84% of the respondents incorrectly named San Miguel Corporation or Ginebra
San Miguel as the manufacturer of Ginebra Kapitan.
Accordingly, based on public perception, it is evident that Ginebra is not a generic term. The use of the
mark Ginebra for over 180 years has allowed the consuming public to designate the term as the gin
product of GSMI. Rather, it is considered a descriptive mark because it characterizes the gin product of
GSMI, which may be registrable under the doctrine of secondary meaning due to the long usage of
GINEBRA and it coming to be known by the consuming public as specifically and particularly
designating the gin product of GSMI.
2. Under the Doctrine of Secondary Meaning, a word or a phrase that is "originally incapable of exclusive
appropriation" may nonetheless be used as a trademark of an enterprise if such word or phrase-by reason
of the latter's long and exclusive use thereof with reference to its article has come to mean that such
article was its product.
As GSMI satisfied all the requisites of the doctrine of secondary meaning with respect to descriptiveness,
prolonged commercial use, and exclusivity in the market, the descriptive mark GINEBRA can still be
protected under the trademark laws and may be registered in favor of GSMI, to the exclusion of others.
Indeed, even assuming that GINEBRA may be the descriptive term for a class of alcoholic drink, it does
not detract from the fact that GINEBRA through its long usage in the Philippines, now commonly
refers to the gin products of GSMI, in particular, to GINEBRA SAN MIGUEL a registered trademark
ofGSMI, which has already acquired a secondary meaning.
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21. HABANA VS. ROBLES
GR No. 131522, July 19, 1999
Ponente: PARDO, J.
Student Assigned: QUIAMCO
Topic under the Syllabus: Copyright
DOCTRINE: To constitute infringement, it is not necessary that the whole or even a large portion of the
work shall have been copied. If so much is taken that the value of the original is sensibly diminished, or the
labors of the original author are substantially and to an injurious extent appropriated by another, that is
sufficient in point of law to constitute piracy.
FACTS: Pacita Habana et al., are the authors and copyright owner of College English for Today (CET),
Books 1 and 2, and Workbook for College Freshman English.
Felicidad Robles and Goodwill Trading Co. author/publisher and distributor/seller of another
published work entitled Developing English Proficiency (DEP) Books 1 and 2.
In the course of revising their published works, petitioners scouted and looked around various
bookstores to check on other textbooks dealing with the same subject matter. By chance they came upon
the book of respondent Robles and upon perusal of said book they were surprised to see that the book
was strikingly similar to the contents, scheme of presentation, illustrations and illustrative examples in
their own book, CET. Petitioners found that several pages of the respondent's book are similar, if not
altogether a copy of petitioners' book, which is a case of plagiarism and copyright infringement.
Petitioners then made demands for damages against respondents and also demanded that they cease and
desist from further selling and distributing to the general public the infringed copies of respondent
Robles' works.
Respondent stressed that (1) the book DEP is the product of her independent researches, studies and
experiences, and was not a copy of any existing valid copyrighted book; (2) DEP followed the scope and
sequence or syllabus which are common to all English grammar writers as recommended by the
Association of Philippine Colleges of Arts and Sciences (APCAS), so any similarity between the
respondents book and that of the petitioners was due to the orientation of the authors to both works
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and standards and syllabus; and (3) the similarities may be due to the authors exercise of the right to fair
use of copyrighted materials, as guides.
Despite the demands of the petitioners for respondents to desist from committing further acts of
infringement and for respondent to recall DEP from the market, respondents refused. Petitioner then
filed a complaint for infringement. The RTC and CA ruled in favor of respondents.
ISSUE: Whether the respondents committed infringement in the production of DEP. (YES.)
RULING: Section 177. It provides for the copy or economic rights of an owner of a copyright as
follows:
Sec. 177. Copy or Economic rights. — Subject to the provisions of chapter VIII, copyright or
economic rights shall consist of the exclusive right to carry out, authorize or prevent the
following acts:
177.1 Reproduction of the work or substantial portion of the work;
Robles, his act of lifting from the book of Habana’s substantial portions of discussions and examples,
and her failure to acknowledge the same in her book is an infringement of petitioners copyrights.
In determining the question of infringement, the amount of matter copied from the copyrighted work
is an important consideration. To constitute infringement, it is not necessary that the whole or even a
large portion of the work shall have been copied. If so much is taken that the value of the original is
sensibly diminished, or the labors of the original author are substantially and to an injurious extent
appropriated by another, that is sufficient in point of law to constitute piracy.
In the case at bar, there is no question that petitioners presented several pages of the books CET and
DEP that more or less had the same contents. It may be correct that the books being grammar books
may contain materials similar to some technical contents with other grammar books, such as the segment
about the Author Card. However, the numerous pages that the petitioners presented showed similarity
in the style and the manner the books were presented and the identical examples can not pass as
similarities merely because of technical consideration.
In cases of infringement, copying alone is not what is prohibited. The copying must produce an
injurious effect. Here, the injury consists in that Robles lifted from Habana’s book materials that were
the result of the latter’s research work and compilation and misrepresented them as her own.
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22. FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC. VS.
ANREY, INC.
G.R. No. 233918, August 9, 2022
Ponente: ZALAMEDA, J.
Student Assigned: VELASCO
DOCTRINE: A radio reception creates a performance separate from the broadcast based on the doctrine
of multiple performances. Accordingly, it is immaterial if the broadcasting station has been licensed by the
copyright owner. The reception of the broadcast becomes a new public performance requiring separate
protection.
The unauthorized transmission of the radio broadcast, which plays copyrighted music, for commercial
purposes cannot be treated as fair use. In this case, the reception was transmitted through loudspeakers
within Anrey’s restaurants which are commercial establishments open to the public. Anrey would not put
up such radio reception and loudspeakers if not to enhance the overall ambiance and dining experience in
its establishments.
FACTS: Filipino Society of Composers, Authors and Publisher, Inc. (FILSCAP) is a non-profit society
of composers, authors, and publishers that owns public performance rights over the copyrighted
musical works of its members. It also owns the right to license public performances in the Philippines
of copyrighted foreign musical works of its members and affiliate performing rights societies abroad.
Such rights proceed from the contracts it has entered into with various composers, authors and
publishers, and record labels, as well as the reciprocal agreements it has with affiliate foreign societies
authorizing FILSCAP to license the public performance in the Philippines of musical works under their
repertoire.
A chain of Sizzling plate restaurants owned by Anrey Inc. in Baguio city, play radio music inside their
restaurants without paying any license fees. FILSCAP, after monitoring the subject establishments,
demanded payment of license fees for playing songs by their musicians. FILSCAP sent several demand
letters which remained unheeded; thus, it filed a complaint for copyright infringement before the RTC
of Baguio City. Anrey Inc. argued that its establishments were merely playing music being broadcast
over the radio, whose royalties have already been paid for by the radio stations.
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The RTC dismissed FILSCAP's complaint for lack of merit citing Sec. 184 (i) of the Intellectual
Property Code which exempts public performances by a club or institution for charitable or educational
purposes provided they are not profit making and they do not charge admission fees. On appeal, CA
affirmed the RTC ruling.
ISSUE: Whether the unlicensed playing of radio broadcasts as background music in dining areas of a
restaurant amounts to copyright infringement and amounts to a violation of the right to public
performance by FILSCAP. (YES.)
RULING: The act of Anrey in playing radio music inside its restaurants is considered a “performance”
which ought to have the permission of the copyright owner. Before copyright holders may claim
infringement, two elements must be proven: (1) they must show ownership of a valid copyright; and (2)
they must demonstrate that the alleged infringers violate at least one economic right granted to copyright
holders. In this case, FILSCAP has the authority to collect royalties and/or license fees and sue for
copyright infringement. As an assignee of copyright, it is entitled to all the rights and remedies which
the assignor had with respect to the copyright.
A "sound recording" means the fixation of sounds of a performance or of other sounds, or representation
of sound, other than in the form of a fixation incorporated in a cinematographic or other audiovisual
work; while a "fixation" is defined as the embodiment of sounds, or of the representations thereof, from
which they can be perceived, reproduced or communicated through a device.
Following the above definitions, a sound recording is publicly performed if it is made audible enough at
a place or at places where persons outside the normal circle of a family, and that family's closest social
acquaintance, are or can be present. The sound recording in this case, is the copyrighted music
broadcasted over the radio which Anrey played through speakers loud enough for most of its patrons to
hear. And the Court is of the belief that the act of playing radio broadcasts containing copyrighted music
through the use of loudspeakers is in itself, a performance.
The Court states that a radio reception is indeed a public performance since the reception of a radio
broadcast and its translation into audible sound is not a mere playing of the original program but is a
reproduction since complicated electrical instrumentalities are necessary for its reception and
distribution.
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The Court introduced the doctrine of multiple performances and the concept of a new public. The
doctrine of multiple performances is that the playing of a record is a performance under copyright laws
and that the reproduction of the radio waves into audible sound waves is also a performance, as in the
case at the bar, which constitutes multiple performances. Meanwhile the concept of a “new public”
contemplates a situation where, typically, radio stations already secured from the copyright owner the
license to broadcast the sound recording. By the nature of broadcasting, it is necessarily implied that its
reception by the public has been consented to by the copyright owners. But the author normally thinks
of the license to broadcast as to "cover only the direct audience receiving the signal within the family
circle." Any further communication of the reception creates, by legal fiction, a "new public" which the
author never contemplated when they authorized its use in the initial communication to the public.
A radio reception creates a performance separate from the broadcast based on the doctrine of multiple
performances. Accordingly, it is immaterial if the broadcasting station has been licensed by the
copyright owner. The reception of the broadcast becomes a new public performance requiring separate
protection.
As to the matter of fair use, the Court ruled that radio reception transmitted through loudspeakers to
enhance profit does not constitute, and is not analogous to, fair use. It went on by explaining that the
unauthorized transmission of the radio broadcast, which plays copyrighted music, for commercial
purposes cannot be treated as fair use. In this case, the reception was transmitted through loudspeakers
within Anrey’s restaurants which are commercial establishments open to the public. Anrey is in the
business of running restaurants, whose end goal is clearly profit- making. Surely, Anrey would not put
up such radio reception and loudspeakers if not to enhance the overall ambiance and dining experience
in its establishments, all for the purpose of economic gain.
23. ABS-CBN CORP. VS. FELIPE GOZON

G.R. No. 195956, March 11, 2015
Ponente: LEONEN, J.
Student Assigned: VALENZUELA
DOCTRINE: News or the event itself is not copyrightable. However, an event can be captured and
presented in a specific medium. As recognized by this court in Joaquin, television “involves a whole spectrum
of visuals and effects, video and audio.” News coverage in television involves framing shots, using images,
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graphics, and sound effects. It involves creative process and originality. Television news footage is an
expression of the news and therefore, copyrightable.
FACTS: The controversy arose from GMA-7’s news coverage on the homecoming of OFW and Iraqi
militant hostage victim Angelo dela Cruz. ABS-CBN conducted live audio-video coverage of and
broadcasted the arrival of Angelo dela Cruz at the NAIA and the subsequent press conference.
ABS-CBN allowed Reuters to air the footage it had taken earlier under a special embargo agreement.
Meanwhile, GMA-7 subscribed to Reuters and it received live video feed coverage of Angelo Dela Cruz’
arrival from them. Thereafter, it carried the live news feed in its program “Flash Report” together with
its live broadcast. Allegedly, GMA-7 did not receive any notice or was not aware that Reuters was airing
footage of ABS-CBN. GMA-7's news control room staff saw neither the "No Access Philippines' ' notice
nor a notice that the video feed was under embargo in favor of ABS-CBN. Consequently, ABS-CBN
then filed a complaint for copyright infringement.
ABS-CBN claims that news footage is subject to copyright and prohibited use of copyrighted material
is punishable under the Intellectual Property Code. It argues that the new footage is not a "newsworthy
event" but "merely an account of the arrival of Angelo dela Cruz in the Philippines — the latter being
the newsworthy event"
On the other hand, respondents argue that ABS-CBN's news footage of Angelo dela Cruz's arrival is not
copyrightable or subject to protection
ISSUE:
1. Whether the news footage is copyrightable under the law. (YES.)
2. Whether criminal prosecution for infringement of copyrightable material, such as live
rebroadcast, can be negated by good faith. (NO.)
RULING:
1. The news footage is copyrightable. The Intellectual Property Code is clear about the rights afforded
to authors of various kinds of work. Under the Code, "works are protected by the sole fact of their
creation, irrespective of their mode or form of expression, as well as of their content, quality and
purpose." These include "[audio-visual works and cinematographic works and works produced by a
process analogous to cinematography or any process for making audiovisual recordings."
While it is true that under Section 175 of the Intellectual Property Code, “news of the day and other
miscellaneous facts having the character of mere items of press information” are considered unprotected
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subject matter. However, the Code does not state that expression of the news of the day, particularly
when it underwent a creative process, is not entitled to protection.
An idea or event must be distinguished from the expression of that idea or event. Ideas can be either
abstract or concrete. It is the concrete ideas that are generally referred to as expression.News or the event
itself is not copyrightable. However, an event can be captured and presented in a specific medium. As
recognized by this court in Joaquin, Jr. v. Drilon (G.R. No. 108946, January 28,1999), television
"involves a whole spectrum of visuals and effects, video and audio." News Coverage in television involves
framing shots, using images, graphics, and sound effects. It involves creative process and originality.
Television news footage is an expression of the news. News as expressed in a video footage is entitled to
copyright protection.
P.D. No. 49, §2, in enumerating what is subject to copyright, refers to finished works and not to
concepts. The copyright does not extend to an idea, procedure, process, system, method of operation,
concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or
embodied in such work.
News or the event itself is not copyrightable. However, an event can be captured and presented in a
specific medium. As recognized by this court in Joaquin, television “involves a whole spectrum of visuals
and effects, video and audio.” News coverage in television involves framing shots, using images,
graphics, and sound effects. It involves creative process and originality. Television news footage is an
expression of the news.
With regard to the neighboring rights of a broadcasting organization in this jurisdiction, this court has
discussed the difference between broadcasting and rebroadcasting:
Section 202.7 of the IP Code defines broadcasting as "the transmission by wireless means for the public
reception of sounds or of images or of representations thereof; such transmission by satellite is also
'broadcasting' where the means for decrypting are provided to the public by the broadcasting
organization or with its consent."
On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting Organizations, otherwise known
as the 1961 Rome Convention, of which the Republic of the Philippines is a signatory, is "the
simultaneous broadcasting by one broadcasting organization of the broadcast of another broadcasting
organization."
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Broadcasting organizations are entitled to several rights and to the protection of these rights under the
Intellectual Property Code.
Respondents’ argument that the subject news footage is not copyrightable is erroneous. The Court of
Appeals, in its assailed Decision, correctly recognized the existence of ABS-CBN’s copyright over the
news footage: Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said
video feed, petitioner GMA is liable under the provisions of the Intellectual Property Code, which was
enacted purposely to protect copyright owners from infringement.
2. Infringement under the Intellectual Property Code is malum prohibitum. The Intellectual Property
Code is a special law. The general rule is that acts punished under a special law are malum prohibitum.
“An act which is declared malum prohibitum, malice or criminal intent is completely immaterial.”
In contrast, crimes mala in se concerns inherently immoral acts. Not every criminal act, however,
involves moral turpitude. It is for this reason that “as to what crime involves moral turpitude, is for the
Supreme Court to determine”. In resolving the foregoing question, the Court is guided by one of the
general rules that crimes mala in se involve moral turpitude, while crimes mala prohibita do not.
Crimes mala in se pre suppose that the person who did the felonious act had criminal intent to do so,
while crimes mala prohibita do not require knowledge or criminal intent.
Unlike other jurisdictions that require intent for a criminal prosecution of copyright infringement, the
Philippines does not statutorily support good faith as a defense. Other jurisdictions provide in their
intellectual property codes or relevant laws that mens rea, whether express or implied, is an element of
criminal copyright infringement.
The Intellectual Property Code requires strict liability for copyright infringement whether for a civil
action or a criminal prosecution; it does not require mens rea or culpa.
Respondents argue that live broadcast of news requires a different treatment in terms of good faith, intent,
and knowledge to commit infringement.
Respondents’ arguments must fail. Respondents are involved and experienced in the broadcasting
business. They knew that there would be consequences in carrying ABS-CBN’s footage in their
broadcast. That is why GMA-7 allegedly cut the feed from Reuters upon seeing ABS-CBN’s ogo and
reporter.
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To admit a different treatment for broadcasts would mean abandonment of a broadcasting
organization’s minimum rights, including copyright on the broadcast material and the right against
unauthorized rebroadcast of copyrighted material. The nature of broadcast technology is precisely why
related or neighboring rights were created and developed. Carving out an exception for live broadcasts
would go against our commitments under relevant international treaties and agreements, which provide
for the same minimum rights.
24. REPUBLIC V. HEIRS OF TUPAZ IV

G.R. No. 197335, September 07, 2020
Ponente: LEONEN, J.
DOCTRINE: The copyright of a derivative work solely belongs to the person who fixes an idea into a
tangible medium of expression. The law on copyright only protects the expression of an idea, not the idea
itself. Thus, one who merely contributes concepts or ideas is not deemed an author.
FACTS: The PNP Directorate for Logistics Support Service authorized the procurement of new
uniforms and equipment for the PNP, including brand new cap devices and badges. The PNP
Directorate on Research and Development, Clothing, and Criminalistics Equipment Division assumed
the responsibility of updating the designs of the PNP cap device and badge.
The PNP Directorate on Research and Development, Clothing, and Criminalistics Equipment
Division collaborated with Jose C. Tupaz, IV (Tupaz) to create the new designs of the PNP cap device
and badge.
Tupaz drew the new designs based on the PNP's specifications and instructions. He then submitted the
finished sketches to the PNP for evaluation. Thereafter, the designs were transmitted to and approved
by the National Police Commission.
Upon approval of the new designs, the PNP conducted a public bidding for the procurement of the
new PNP cap devices and badges. Among those who participated was El Oro Industries, Inc. (El Oro).
Tupaz was El Oro's then-president and chair of the board of directors.
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El Oro submitted the second highest bid price. After the tabulation of the bids, El Oro presented before
the PNP's Bids and Awards Committee certificates of copyright registration over the PNP cap device
and badge issued in favor of Tupaz. Hence, the contract was not awarded to the winning bidder, but to
El Oro.
Eventually, the Republic of the Philippines, through the PNP, filed a Complaint before the Quezon
City Regional Trial Court for the cancellation of Tupaz's certificates of copyright registration.
The RTC held that the new designs of the PNP cap device and badge were created by the PNP
Directorate for Research and Development, Clothing, and Criminalistics Equipment Division.
However, on appeal, the classified the new designs of the PNP cap device and badge as derivative works
entitled to copyright protection. It further held that Tupaz is the author of the new designs. The PNP
only contributed ideas, but it was Tupaz who actually made the new designs.
ISSUE Whether the new designs of the PNP cap device and badge are entitled to copyright protection,
and the copyright belongs to Tupaz as the creator and not to PNP. (YES.)
RULING: Copyright is "the right granted by statute to the proprietor of an intellectual production to
its exclusive use and enjoyment[.]" It "may be obtained and enjoyed only with respect to the subjects
and by the persons, and on terms and conditions specified in the statute." Copyright is a purely statutory
right. Only classes of works falling under the statutory enumeration are entitled to protection.
On the other hand, a derivative work refers to a work that is "based on...one or more already existing
works." The author of a derivative work borrows expressive content from an existing work and
transforms it into another work. Through this process, the author of a derivative work does not simply
copy the existing work but creates an original work entitled to a separate copyright.
The Court of Appeals correctly classified the new designs of the PNP cap device and badge as derivative
works. Respondents, in collaboration with the PNP and upon its instruction, borrowed expressive
content from the pre- existing designs of the PNP cap device and badge to create the new. The new
designs are considered alterations of artistic works under Section 2(P) of Presidential Decree No. 49.
However, they can only be copyrighted if they were produced with the consent of the creator of the pre-
existing designs and if there is distinction between the new designs and the pre-existing designs. Both
requisites are present in this case.
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Here, the parties asserting ownership over the pre-existing designs are the very same ones who
collaborated to create the new designs.
Since the creator of the new designs must borrow expressive content from the pre-existing designs, the
new designs would obviously incorporate elements of the original material. In this case, the borrowed
elements of the original material are the native shield, the eight (8) rays of the sun, three (3) stars' laurel
leaves' and the words "service," "honor," and "Justice.
The test of whether the new designs are copyrightable independently from the pre-existing works is the
presence of originality in the derivative work. The new work, although similar to the pre-existing work
in some of its expressive elements, must be substantially distinct from the pre-existing work.
A careful comparison of the pre-existing designs and the new designs shows that there are substantial
distinctions between the two:
As to the cap device: The most prominent feature of the pre-existing PNP cap device is the native shield.
In the new design of the PNP cap device, the native shield has been reduced in size and the laurel leaves
are made more noticeable. The Court of Appeals observed that the native shield in the pre-existing
design is "checkered cream and red in color." On the other hand, the native shield in the new design is
silver.
The pre-existing PNP cap device contains the words "PHILIPPINE NATIONAL POLICE" located
inside the native shield, which was eliminated in the new design. Instead, the words "PHILIPPINES"
and "POLICE" were placed at the top and bottom of the cap device, respectively. Furthermore, the word
"POLICE" is more prominent in the new design. There are also 8 short sun rays on top of the cap device:
As to the badge: The most prominent feature of the pre- existing design is the native shield, which has
been reduced in size in the new design. Another prominent feature of the pre-existing design is the badge
number. The badge number in the new design was reduced and placed at the bottom portion.
The words "PHILIPPINE NATIONAL POLICE" were transposed from the native shield in the pre-
existing design and were placed on top in the new design. The shapes of the two designs are also different.
The new design takes the general shape of an oval compared to the pre-existing design. Aside from these,
the Court of Appeals observed that the new design contains the colors black, red, white, and blue.
Moreover, under Section 2 of Presidential Decree No. 49, the copyright belongs to the creator of the
work or the creator's heirs or assigns. If the work is created by two (2) or more persons, they shall own
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the copyright jointly. The same principles are embodied in Sections 178.1 and 178.2 of Republic Act
No. 8293.
P.D. No. 49, §2, in enumerating what are subject to copyright, refers to finished works and not to concepts.
The copyright does not extend to an idea, procedure, process, system, method of operation, concept,
principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied
in such work.
Although a creator or author is not expressly defined under Pres. Decree No. 49, it may be logically
inferred—based on the scope of copyrightable works—that a creator or an author pertains to someone
who transforms an abstract idea into a tangible form of expression through the application of skill or
labor.
To create a thing that may be entitled to a copyright requires something more than the giving of ideas
and concepts. Ideas should translate to or transition into something that is tangible or physical. In other
words, something capable of being perceived must be produced. To illustrate, an image that remains in
a person's mind would not be entitled to copyright protection unless he or she draws it on a piece of
paper or paints the image on canvass.
In this case, it is undisputed that petitioner and respondent Tupaz collaborated to develop the new
designs of the PNP cap device and badge. However, the extent of petitioner's participation in developing
the new designs of the PNP cap device and badge was limited to instructing respondent Tupaz on how
the designs should appear in general and what specific elements should be incorporated. Petitioner
merely supplied ideas and concepts.It was respondent Tupaz who used his skill and labor to concretize
what petitioner had envisioned. Therefore, petitioner cannot be considered as an author of the new
designs either in whole or in part.
Petitioner is also not entitled to own the copyright under any of the exceptions in Section 6 of
Presidential Decree No. 49. The first exception refers to works created in the course of the employment
of the creator. Section 6 of Presidential Decree No. 49 states:
If the work in which copyright subsists was made during and in the course of the employment of the
creator, the copyright shall belong to:
(a) The employee, if the creation of the object of copyright is not a part of his regular duties even if the
employee uses the time, facilities and materials of the employer.
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(b) The employer, if the work is the result of the performance of his regularly assigned duties, unless
there is an agreement, express or implied to the contrary.
The second exception refers to commissioned works. Under Section 178.4 of Republic Act No. 8293,
the copyright of a commissioned work generally belongs to the creator. However, the parties may agree
in writing to transfer the copyright to the person who commissioned the work.
In the present case, petitioner is not entitled to own the copyright because the designs were neither
commissioned works nor works created in the course of respondent Tupaz's employment. First,
although the parties verbally agreed to work together, petitioner did not hire respondent Tupaz's services
for a fee or a commission. Respondent Tupaz rendered his services voluntarily. In other words, the new
designs do not qualify as commissioned works. Second, there was no employer-employee relationship
between the parties at the time the designs were made.
Petitioner could have avoided this dispute had it entered into a contract that clearly and expressly spelled
out the extent of each party's rights over the new designs, as Presidential Decree No. 49 allows the
transfer or assignment of the work and its copyright to other persons by gift, inheritance, or otherwise.
25. PEARL & DEAN, INC. vs. SHOEMART, INC. and NORTH EDSA MARKETING, INC.
G.R. No. 148222, August 15, 2003.
Ponente: CORONA, J.
Topic under the Syllabus: Copyright Infringement
DOCTRINE: Copyright is purely a statutory right. Being a mere statutory grant, the rights are limited
to what the statute confers. Accordingly, it can cover only the works falling within the statutory
enumeration or description. Petitioner’s copyright protection extended only to the technical drawings and
not to the light box itself because the latter was not at all in the category of "prints, pictorial illustrations,
advertising copies, labels, tags and box wraps." Stated otherwise, even as we find that Pearl & Dean indeed
owned a valid copyright, the same could have referred only to the technical drawings within the category of
"pictorial illustrations." It could not have possibly stretched out to include the underlying light box. What
the law does not include, it excludes, and for the good reason: the light box was not a literary or artistic piece
which could be copyrighted under the copyright law.
FACTS: Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display
units simply referred to as light boxes. Pearl and Dean was able to secure a Certificate of Copyright
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Registration, and these advertising light boxes were marketed under the trademark "Poster Ads". The
application for registration of the trademark was filed with the Bureau of Patents, Trademarks and
Technology Transfer on June 20, 1983, but was approved only on September 12, 1988.
Pearl and Dean negotiated with Shoemart, Inc. (SMI) for the lease and installation of the light boxes in
SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as
an alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed. Pearl and Dean’s General
Manager, Rodolfo Vergara, submitted for signature the contracts covering SM Cubao and SM Makati
to SMI’s Advertising Promotions and Publicity Division Manager, Ramonlito Abano, but only the
contract covering SM Makati was returned signed. Vergara wrote Abano inquiring about the other
contract but SMI did not bother to reply.
SMI’s house counsel informed Pearl and Dean that it was rescinding the contract for SM Makati due to
non-performance of the terms thereof. Vergara protested the unilateral action of SMI, saying it was
without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to
fabricate its display units, offered to construct light boxes for Shoemart’s chain of stores. After its
contract with Metro Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising
Corporation to make the light boxes. Some 300 units were fabricated in 1991.
Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the
fastfood section of SM Cubao. Pearl and Dean found out that aside from the two (2) reported SM
branches, light boxes similar to those it manufactures were also installed in two (2) other SM stores. It
further discovered that North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots
Marketing Services, was set up primarily to sell advertising space in lighted display units located in SMI’s
different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
Pearl and Dean sent a letter to both SMI and NEMI enjoining them to cease using the subject light boxes
and to remove the same from SMI’s establishments. It also demanded the discontinued use of the
trademark "Poster Ads.”
SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down its
advertisements for "Poster Ads.” Pearl and Dean filed this instant case for infringement of trademark
and copyright, unfair competition and damages.
ISSUE: Whether the engineering or technical drawings of an advertising display unit (light box) are
granted copyright protection (copyright certificate of registration) by the National Library. (NO.)
RULING: There was no copyright infringement, the copyright was limited to the drawings alone and
not to the light box itself.
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Copyright is purely a statutory right. Being a mere statutory grant, the rights are limited to what the
statute confers. Accordingly, it can cover only the works falling within the statutory enumeration or
description.
Petitioner’s copyright protection extended only to the technical drawings and not to the light box itself
because the latter was not at all in the category of "prints, pictorial illustrations, advertising copies, labels,
tags and box wraps." Stated otherwise, even as we find that P & D indeed owned a valid copyright, the
same could have referred only to the technical drawings within the category of "pictorial illustrations."
It could not have possibly stretched out to include the underlying light box. The strict application of the
law’s enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its
copyright certificate was entitled "Advertising Display Units." What the law does not include, it
excludes, and for the good reason: the light box was not a literary or artistic piece which could be
copyrighted under the copyright law.
During the trial, the president of P & D himself admitted that the light box was neither a literary not an
artistic work but an "engineering or marketing invention." Obviously, there appeared to be some
confusion regarding what ought or ought not to be the proper subjects of copyrights, patents and
trademarks. These three legal rights are completely distinct and separate from one another, and the
protection afforded by one cannot be used interchangeably to cover items or works that exclusively
pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to
literary and artistic works which are original intellectual creations in the literary and artistic
domain protected from the moment of their creation. Patentable inventions, on the other hand,
refer to any technical solution of a problem in any field of human activity which is new, involves
an inventive step and is industrially applicable.
ADDITIONAL NOTES:
On Patent Infringement
ISSUE: Whether the light box should be registered separately and protected by a patent— in addition
to the copyright of the engineering drawings. (YES.)
RULING: Petitioner never secured a patent for the light boxes. It therefore acquired no patent rights
which could have protected its invention, if in fact it really was. And because it had no patent, petitioner
could not legally prevent anyone from manufacturing or commercially using the contraption. In Creser
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Precision Systems, Inc. vs. Court of Appeals, it was held that "there can be no infringement of a patent
until a patent has been issued, since whatever right one has to the invention covered by the patent arises
alone from the grant of patent. x x x An inventor has no common law right to a monopoly of his
invention. He has the right to make use of and sell his invention, but if he voluntarily discloses it, such
as by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the
inventor the right to exclude all others. As a patentee, he has the exclusive right of making, selling or
using the invention. On the assumption that petitioner’s advertising units were patentable inventions,
petitioner revealed them fully to the public by submitting the engineering drawings thereof to the
National Library.
No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies
into the public domain through disclosure. Ideas, once disclosed to the public without the protection
of a valid patent, are subject to appropriation without significant restraint.
The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second,
it promotes disclosures of inventions to stimulate further innovation and to permit the public to
practice the invention once the patent expires; third, the stringent requirements for patent protection
seek to ensure that ideas in the public domain remain there for the free use of the public."
On Trademark Infringement
ISSUE: Whether the owner of a registered trademark legally prevents others from using such trademark
if it is a mere abbreviation of a term descriptive of his goods, services or business. (Only if specified in
the trademark certificate)
RULING: This issue concerns the use by respondents of the mark "Poster Ads" which petitioner’s
president said was a contraction of "poster advertising." P & D was able to secure a trademark certificate
for it, but one where the goods specified were "stationeries such as letterheads, envelopes, calling cards and
newsletters." Petitioner admitted it did not commercially engage in or market these goods. On the contrary,
it dealt in electrically operated backlit advertising units and the sale of advertising spaces thereon, which,
however, were not at all specified in the trademark certificate.
“The certificate of registration issued by the Director of Patents can confer (upon petitioner) the
exclusive right to use its own symbol only to those goods specified in the certificate, subject to any
conditions and limitations specified in the certificate. One who has adopted and used a trademark on
his goods does not prevent the adoption and use of the same trademark by others for products which are of
a different description."
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure
a trademark registration for specific use on the light boxes meant that there could not have been any
trademark infringement since registration was an essential element thereof.
On Unfair Competition
209
ISSUE: Whether the respondents are liable for unfair competition. (NO.)
RULING: While the petitioner’s complaint in the RTC also cited unfair competition, the trial court
did not find private respondents liable therefor. Petitioner did not appeal this particular point; hence, it
cannot now revive its claim of unfair competition.
There can be no unfair competition under the law on copyrights although it is applicable to disputes
over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or
tradename may, by long and exclusive use by a business (such that the name or phrase becomes
associated with the business or product in the mind of the purchasing public), be entitled to protection
against unfair competition. In this case, there was no evidence that P & D’s use of "Poster Ads" was
distinctive or well-known.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic
and incapable of being used as a trademark because it was used in the field of poster advertising, the very
business engaged in by petitioner. "Secondary meaning" means that a word or phrase originally incapable
of exclusive appropriation with reference to an article in the market (because it is geographically or
otherwise descriptive) might nevertheless have been used for so long and so exclusively by one producer
with reference to his article that, in the trade and to that branch of the purchasing public, the word or
phrase has come to mean that the article was his property. The admission by petitioner’s own expert
witness that he himself could not associate "Poster Ads" with petitioner P & D because it was "too
generic" definitely precluded the application of this exception.
26. COLUMBIA PICTURES VS. COURT OF APPEALS

261 SCRA 144 (1996)
Ponente: REGALADO, J.
Student Assigned: STA. ANA

DOCTRINE:
FACTS: Complainants thru counsel lodged a formal complaint with the National Bureau of
Investigation for violation of P.D. 49 and sought its assistance in their anti-film piracy drive. Agents of
the NBI and private researchers made discreet surveillance on various video establishments, including
Sunshine Home Video, Inc.,
210
NBI Senior Agent Lauro C. Reyes applied for a search warrant with the court against Sunshine, seeking
the seizure, among others, of pirated video taps of copyrighted films, and televisions sets, video cassettes
and/or laser disc recordings equipment and other machines and paraphernalia used or intended to be
used in the unlawful exhibition, showing, reproduction, sale, lease or disposition of videogram tapes in
the premises.
On the basis of the affidavits and depositions of NBI Senior Agent Lauro C. Reyes, Rene C. Baltazar
and Atty. Rico V. Domingo, a search warrant was issued.
The search warrant was served to sunshine, and in the course of the search, the NBI Agent found and
seized various video taps of duly copyrighted motion pictures/films owned or exclusively distributed by
private complainants, and machines, equipment, and other paraphernalia, all of which were included in
the receipt for properties accomplished.
ISSUES:
1. Whether it is necessary that petitioners are doing business in the Philippines to maintain a court
action. (NO.)
2. Whether the Ruling in the 20th Century Fox case should be applied retroactively. (NO.)
3. Whether the infringement committed is actionable. (YES.)
RULING:
1. The obtainment of a license prescribed by Section 125 of the Corporation Code is not a condition
precedent to the maintenance of any kind of action in Philippine courts by a foreign corporation.
Any foreign corporation not doing business in the Philippines may maintain an action in our courts
upon any cause of action, provided that the subject matter and the defendant are within the jurisdiction
of the court. It is not the absence of the prescribed license but “doing business” in the Philippines
without such license which debars the foreign corporation from access to our courts.
211
The true tests, however, seem to be whether the foreign corporation is continuing the body or substance
of the business or enterprise for which it was organized or whether it has substantially retired from it
and turned it over to another.
Petitioners are not barred from maintaining the present action. There is no showing that, under our
statutory or case law, petitioners are doing, transacting, engaging or carrying on business in the
Philippines as would require obtention of a license before they can seek redress from our courts.
2. Mindful as we are of the ramifications of the doctrine of stare decisis and the rudiments of fair play,
it is our considered view that the 20th Century Fox ruling cannot be retroactively applied to the instant
case to justify the quashal of Search Warrant No. 87-053. The lower court could not possibly have
expected more evidence from petitioners in their application for a search warrant other that what the
law and jurisprudence, then existing and judicially accepted, required with respect to the finding of
probable cause.
It is evidently incorrect to suggest, as the ruling in 20th Century Fox may appear to do, that in copyright
infringement cases, the presentation of master tapes of the copyrighted films is always necessary to meet
the requirement of probable cause and that, in the absence thereof, there can be no finding of probable
cause for the issuance of a search warrant.
It is true that such master tapes are object evidence, with the merit that in this class of evidence the
ascertained of the controverted fact is made through demonstrations involving the direct use of the
senses of the presiding magistrate. Such auxiliary procedure, however, does not rule out the use of
testimonial or documentary evidence, depositions, admissions or other classes of evidence tending to
prove the factum probandum, especially where the production in court of object evidence would result
in delay, inconvenience or expenses our of proportion to its evidentiary value.
3. The trial court’s finding that private respondents committed acts in blatant transgression of
Presidential Decree No. 49 all the more bolster its findings of probable cause, which determination can
be reached even in the absence of master tapers by the judge in the exercise of sound discretion.
Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the
copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a
synonymous term in this connection, consists in the doing by any person, without the consent of the
212
owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of
the copyright.
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases,
did not know what works he was indirectly copying, or did not know whether or not he was infringing
any copyright; he at least knew that what he was copying was not his, and he copied at his peril.
To constitute infringement, it is not necessary that the whole or even a large portion of the work shall
have been copied. If so much is taken that the value of the original is sensibly diminished, or the labors
of the original author are substantially and to an injurious extent appropriated by another, that is
sufficient in point of law to constitute a piracy.
27. NBI- MICROSOFT CORP. VS. HWANG

G.R. No. 147043, June 21, 2005.
Ponente: CARPIO, J.
Student Assigned: BALICOCO
DOCTRINE: Infringement of a copyright is a trespass on a private domain owned and occupied by the
owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is
a synonymous term in this connection, consists in the doing by any person, without the consent of the owner
of the copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright.
Under Section 5(A), a copyright owner is vested with the exclusive right to "copy, distribute, multiply, [and]
sell" his intellectual works.
FACTS: Petitioner Microsoft Corporation, a Delaware, United States corporation, owns the copyright
and trademark to several computer software. Respondents Benito Keh and Yvonne Keh are the
President/Managing Director and General Manager, respectively, of respondent Beltron Computer
Philippines, Inc. Respondents Jonathan K. Chua, Emily K. Chua, Benito T. Sanchez, and Nancy I.
Velasco are Beltron's Directors. On the other hand, respondents Alfonso Chua, Alberto Chua, Judy K.
Chua Hwang, Sophia Ong, and Deanna Chua are the Directors of respondent Taiwan Machinery
Display & Trade Center, Inc. ("TMTC"), also a domestic corporation.
213
In May 1993, Microsoft and Beltron entered into a Licensing Agreement ("Agreement"). Under Section
2(a) of the Agreement, as amended in January 1994, Microsoft authorized Beltron, for a fee, to:
(i) xxx reproduce and install no more than one (1) copy of [Microsoft] software on each
Customer System hard disk or Read Only Memory ("ROM"); [and]
(ii) xxx distribute directly or indirectly and license copies of the Product (reproduced as per
Section 2(a)(i) and/or acquired from Authorized Replicator or Authorized Distributor) in
object code form to end users[.] xxxx
The Agreement also authorized Microsoft and Beltron to terminate the contract if the other fails to
comply with any of the Agreement's provisions. Microsoft terminated the Agreement effective 22 June
1995 for Beltron's non-payment of royalties.
Microsoft learned that respondents were illegally copying and selling Microsoft software. Consequently,
Microsoft, through its Philippine agent, hired the services of Pinkerton Consulting Services (PCS), a
private investigative firm. Microsoft also sought the assistance of the NBI. PCS employee Sacriz and
NBI agent Samiano, Jr., posing as representatives of a computer shop, bought a CPU,a computer
monitor and software (12 computer disks in ROM format) from respondents. The CPU contained pre-
installed Microsoft Windows 3.1 and MS-DOS software. The 12 CD-ROMs, encased in plastic
containers with Microsoft packaging, also contained Microsoft software. At least two of the CD-ROMs
were "installers," so-called because they contain several software (Microsoft only or both Microsoft and
non-Microsoft).
Microsoft applied for search warrants against respondents. The NBI searched the premises of Beltron
and TMTC and seized several computer-related hardware, software, accessories, and paraphernalia.
Among these were 2,831 pieces of CD-ROMs containing Microsoft software. Microsoft and a certain
Lotus Development Corporation charged respondents before the DOJ with copyright infringement
under Section 5(A) in relation to Section 29 of Presidential Decree No. 49, as amended, ("PD 49")18
and with unfair competition under Article 189(1)19 of the Revised Penal Code.
DOJ: DOJ State Prosecutor Jocelyn A. Ong ("State Prosecutor Ong") recommended the dismissal of
Microsoft's complaint for lack of merit and insufficiency of evidence. State Prosecutor Ong also
recommended the dismissal of Lotus Corporation's complaint for lack of interest to prosecute and for
insufficiency of evidence.
a) Whether or not Beltron Computer and/or its stockholders should be held liable for the
offenses charged.
No. ["]It appears therefore that prior to the issuance of the subject search warrants, complainant
had some business transactions with the respondent [Beltron] along the same line of products.
214
Complainant failed to reveal the true circumstances existing between the two of them as it now
appears, indeed the search warrant[s] xxx [are] being used as a leverage to secure collection of the
money obligation which the Court cannot allow."
This office has no power to pass upon said issue for one has then to interpret the provisions of
the contract entered into by the parties, which question, should be raised in a proper civil
proceeding. Accordingly, absen[t] a resolution from the proper court of (sic) whether or not the
contract is still binding between the parties at the time of the execution of the search warrants,
this office cannot pass upon the issue of whether respondent/s is or are liable for the offense
charged.
b) Whether or not prima facie case exist[s] against Taiwan Machinery Display and Trade
Center, Inc. (TMTC) for violation of the offense charged.
No. TMTC had provided sufficient evidence to prove that indeed the Microsoft software in
their possession were bought from Singapore. Thus, respondent/s in this case has/have no intent
to defraud the public, as provided under Article 189 of the Revised Penal Code, for they bought
said Microsoft MS-DOS 6.0 from an alleged licensee of Microsoft in Singapore, with all the
necessary papers. In their opinion, what they have are genuine Microsoft software, therefore no
unfair competition exists. Moreover, violation of P.D. 49 does not exist, for respondent/s
was/were not the manufacturers of the Microsoft software seized and were selling their products
as genuine Microsoft software, considering that they bought it from a Microsoft licensee.
ISSUE: Whether the DOJ acted with grave abuse of discretion in not finding probable cause to charge
respondents with copyright infringement and unfair competition. (YES.)
RULING: The petition has merit. The DOJ Acted with Grave Abuse of Discretion in not Finding
Probable Cause to Charge Respondents with Copyright Infringement and Unfair Competition.
Section 539 of PD 49 ("Section 5") enumerates the rights vested exclusively on the copyright owner.
(Note that this has already been superseded by the present IP Code ):
(A) To print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-
engravings, and pictorial illustrations of the works;
(B) To make any translation or other version or extracts or arrangements or adaptations thereof;
to dramatize it if it be a non-dramatic work; to convert it into a non-dramatic work if it be a
drama; to complete or execute it if it be a model or design;
215
(C) To exhibit, perform, represent, produce, or reproduce the work in any manner or by any
method whatever for profit or otherwise; if not reproduced in copies for sale, to sell any
manuscripts or any records whatsoever thereof;
(D) To make any other use or disposition of the work consistent with the laws of the land.
We held in Columbia Pictures, Inc. v. Court of Appeals:
Infringement of a copyright is a trespass on a private domain owned and occupied by the owner
of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy,
which is a synonymous term in this connection, consists in the doing by any person, without
the consent of the owner of the copyright, of anything the sole right to do which is conferred by
statute on the owner of the copyright.
Under Section 5(A), a copyright owner is vested with the exclusive right to "copy, distribute,
multiply, [and] sell" his intellectual works.
On the other hand, the elements of unfair competition under Article 189(1)43 of the Revised Penal
Code are:
(a) That the offender gives his goods the general appearance of the goods of another
manufacturer or dealer;
(b) That the general appearance is shown in the (1) goods themselves, or in the (2) wrapping of
their packages, or in the (3) device or words therein, or in (4) any other feature of their
appearance[;]
(c) That the offender offers to sell or sells those goods or gives other persons a chance or
opportunity to do the same with a like purpose[; and]
(d) That there is actual intent to deceive the public or defraud a competitor.44
The element of intent to deceive may be inferred from the similarity of the goods or their appearance.
On the Sufficiency of Evidence to Support a Finding of Probable Cause Against Respondents
DOJ, refused to pass upon the relevance of these pieces of evidence because: (1) the "obligations between
the parties is civil and not criminal" considering that Microsoft merely sought the issuance of Search
Warrant Nos. 95-684 and 95-685 to pressure Beltron to pay its obligation under the Agreement, and (2)
the validity of Microsoft's termination of the Agreement must first be resolved by the "proper court."
On the other hand, the DOJ ruled that Microsoft failed to present evidence proving that what were
obtained from respondents were counterfeit Microsoft products. This is grave abuse of discretion.
216
First. Being the copyright and trademark owner of Microsoft software, Microsoft acted well within its
rights in filing the complaint under I.S. No. 96-193 based on the incriminating evidence obtained from
respondents. Hence, it was highly irregular for the DOJ to hold that Microsoft sought the issuance of
Search Warrant and by inference, the filing of the complaint under I.S. No. 96-193, merely to pressure
Beltron to pay its overdue royalties to Microsoft.
Second. There is no basis for the DOJ to rule that Microsoft must await a prior "resolution from the
proper court of (sic) whether or not the [Agreement] is still binding between the parties." Beltron has
not filed any suit to question Microsoft's termination of the Agreement. Microsoft can neither be
expected nor compelled to wait until Beltron decides to sue before Microsoft can seek remedies for
violation of its intellectual property rights.
Furthermore, some of the counterfeit CD-ROMs bought from respondents were "installer"
CD-ROMs containing Microsoft software only or both Microsoft and non-Microsoft software.
These articles are counterfeit per se because Microsoft does not (and could not have authorized
anyone to) produce such CD-ROMs. The copying of the genuine Microsoft software to
produce these fake CD-ROMs and their distribution are illegal even if the copier or distributor
is a Microsoft licensee.
Even if the Agreement still subsists, Microsoft is not precluded from seeking remedies under PD
49 and Article 189(1) of the Revised Penal Code to vindicate its rights.
Third. The Court finds that the 12 CD-ROMs ("installer" and "non-installer") and the CPU with pre-
installed Microsoft software Sacriz and Samiano bought from respondents and the 2,831 Microsoft CD-
ROMs seized from respondents suffice to support a finding of probable cause to indict respondents for
copyright infringement under Section 5(A) in relation to Section 29 of PD 49 for unauthorized copying
and selling of protected intellectual works.
On the 2,831 Microsoft CD-ROMs49 seized from respondents, respondent Beltron, the only
respondent who was party to the Agreement, could not have reproduced them under the Agreement as
the Solicitor General and respondents contend. Beltron's rights under the Agreement were limited to:
(1) the "reproduc[tion] and install[ation of] no more than one copy of [Microsoft] software on
each Customer System hard disk or Read Only Memory ("ROM")"; andcralawlibrary
(2) the "distribut[ion] xxx and licens[ing of] copies of the [Microsoft] Product [as reproduced
above] and/or acquired from Authorized Replicator or Authorized Distributor) in
object code form to end users."
An authorized replicator as "a third party approved by [Microsoft] which may reproduce and
manufacture [Microsoft] Product[s] for [Beltron] xxx. An authorized distributor, on the other hand, is
a "third party approved by [Microsoft] from which [Beltron] may purchase MED53 Product." Being a
mere reproducer/installer of one Microsoft software copy on each customer's hard disk or ROM,
217
Beltron could only have acquired the hundreds of Microsoft CD-ROMs found in respondents'
possession from Microsoft distributors or replicators.
28. MICROSOFT CORPORATION VS. ROLANDO D. MANANSALA

G.R. No. 166391, October 21, 2015
Student Assigned: TIU
DOCTRINE: Presidential Decree No. 49 thereby already acknowledged the existence of computer
programs as works or creations protected by copyright. It is contrary to the legislative intent to require that
the computer programs be first photographed, photo-engraved, or pictorially illustrated as a condition for
the commission of copyright infringement.
FACTS: Microsoft Corp. is the copyright and trademark owner of all rights relating to all versions and
editions of Microsoft software (computer programs). Rolando Manansala is doing business under the
name of Dataman Trading Co. and/or Comic Alley. It was engaged in distributing and selling Microsoft
computer software programs without authorization from Microsoft.
Mr. John Benedict A. Sacriz, a private investigator accompanied by an agent from the National Bureau
of Investigation (NBI) was able to purchase six (6) CD-ROMs containing various computer programs
belonging to Microsoft. As a result of the test-purchase, the agent from the NBI applied for a search
warrant to search the premises of Manansala and yielded several illegal copies of Microsoft programs.
Subsequently, petitioner, through Atty. Teodoro Kalaw IV filed an Affidavit-Complaint in the DOJ
based on the results of the search and seizure operation conducted on private respondent's premises.
However, in a Resolution dated March 20, 2000, public respondent State Prosecutor dismissed the
charge against private respondent for violation of Sec. 29 P.D. 49: ‘The evidence is extant in the records
to show that respondent is selling Microsoft computer software programs bearing the copyrights and
trademarks owned by Microsoft Corporation. There is, however, no proof that respondent was the one
who really printed or copied the products of complainant for sale in his store.
218
WHEREFORE, it is hereby, recommended that respondent be charged for violation of Article 189 of
the Revised Penal Code. The charge for violation of Section 29 of PD No. 49 is recommended dismissed
for lack of evidence.
ISSUE: Whether the printing or copying is essential in the commission copyright infringement under
Sec 29 of PD 49. (YES.)
RULING: Presidential Decree No. 49 thereby already acknowledged the existence of computer
programs as works or creations protected by copyright. To hold, as the CA incorrectly did, that the
legislative intent was to require that the computer programs be first photographed, photo-engraved, or
pictorially illustrated as a condition for the commission of copyright infringement invites ridicule.
The CA erred in its reading and interpretation of Section 5 of Presidential Decree No. 49. Under the
rules on syntax, the conjunctive word and denotes a joinder or union of words, phrases, or clause; it is
different from the disjunctive word or that signals disassociation or independence. However, a more
important rule of statutory construction dictates that laws should be construed in a manner that avoids
absurdity or unreasonableness.
29. FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC. VS.

ANREY, INC.
G.R. No. 2339129, August 9, 2022.
Ponente: ZALAMEDA, J.
Student Assigned: COQUIA
DOCTRINE: The Court determined that playing radio broadcasts containing copyrighted music falls
within the scope of public performance and communication to the public, which are exclusive rights of
copyright holders.
FACTS: FILSCAP, a non-profit society that owns public performance rights over copyrighted musical
works and licenses public performances in the Philippines, filed a copyright infringement claim against
Anrey, Inc., a chain of restaurants.
219
Anrey was assessed by FILSCAP to pay annual license fees for playing copyrighted music in its
restaurants.
FILSCAP filed a complaint for copyright infringement, but the Regional Trial Court (RTC) dismissed
the case, citing an exemption for public performances for charitable or educational purposes.
FILSCAP appealed to the Court of Appeals (CA), which affirmed the RTC's decision.
The main issue in the case is whether playing radio broadcasts as background music in restaurants
constitutes copyright infringement.
ISSUE: Whether playing radio broadcasts as background music in restaurants constitute copyright
infringement. (YES.)
RULING:
The Supreme Court ruled in favor of FILSCAP, stating that playing radio broadcasts containing
copyrighted music through loudspeakers is considered a public performance and a violation of
copyright.
The Court rejected Anrey's argument that it was exempt from obtaining a license since the radio station
already secured one from FILSCAP.
The Court emphasized that the exemption for public performances for charitable or educational
purposes does not apply to commercial establishments like Anrey's restaurants.
The Court further clarified that the unauthorized transmission of radio broadcasts for commercial
purposes does not constitute fair use.
Anrey was ordered to pay actual damages and attorney's fees to FILSCAP.
The Court based its decision on the provisions of the Philippine Copyright Law, which grants copyright
holders exclusive rights to carry out, authorize, or prevent acts such as reproduction, distribution, rental,
public display, public performance, and communication to the public.
220
The Court determined that playing radio broadcasts containing copyrighted music falls within the
scope of public performance and communication to the public, which are exclusive rights of copyright
holders.
The Court explained that radio reception creates a performance separate from the broadcast and that
the doctrine of multiple performances applies.
The Court rejected Anrey's argument that its use of radios fell under fair use or exemptions to copyright
infringement, stating that fair use applies to limited and transformative uses of copyrighted works.
The Court emphasized that fair use does not apply to commercial establishments like Anrey's
restaurants.
The Court concluded that Anrey's use of copyrighted music did not fall under any of the exceptions or
limitations on copyright infringement provided by Philippine law.
Anrey was ordered to pay actual damages and attorney's fees to FILSCAP for the copyright
infringement.
30. COSAC, INC. VS. FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND

PUBLISHERS, INC.
G.R. No. 222537, February 28, 2023
Ponente: HERNADO, J.
Student Assigned: RAMIREZ

DOCTRINE: The gravamen of copyright infringement, according to NBI-Microsoft Corporation v.
Hwang, is not merely the unauthorized 'manufacturing' of intellectual works but rather the unauthorized
performance of any of the acts covered by Section 5. Hence, any person who performs any of the acts under
Section 5 without obtaining the copyright owner's prior consent renders himself civilly and criminally
liable for copyright infringement.
221
FACTS: FILSCAP is a non-stock, non-profit corporation comprised of composers, authors, and music
publishers. It is tasked to enforce and protect the performing rights of copyright owners of musical
works. FILSCAP is also authorized to issue licenses and collect license fees for the public performance
of copyrighted musical works under its repertoire, whether for profit or not. FILSCAP alleged that
Filipino composers executed deeds of assignment, and foreign composers/publishers of musical works
executed reciprocal representation agreements, whereby they assigned to FILSCAP their rights to the
use and protection of their copyrighted works.
A representative from FILSCAP who monitored Off the Grill Bar and Restaurant (Off the Grill) in
Quezon City (owned and operated by COSAC) discovered that the restaurant played copyrighted
music without obtaining from FILSCAP a license or paying the corresponding fees. Thus, FILSCAP
advised COSAC to secure the required licenses and sent letters of the same tenor. Without getting a
favorable response from COSAC, FILSCAP filed a Complaint for infringement of copyright and
damages against COSAC. FILSCAP alleged that COSAC's refusal to secure the license and its
continued use of copyrighted music without the requisite performing rights constitute acts of
infringement. Thus, COSAC should be compelled to secure a license and to pay royalty fees, damages,
and attorney's fees.
Conversely, COSAC argued that FILSCAP is not a real party-in-interest since it did not prove that the
copyright owners assigned their rights to FILSCAP. COSAC denied committing infringement as it had
no knowledge about what the band members would sing as part of their performance, and because songs
once aired and performed become public property.
To prove its standing to file the case, FILSCAP presented the deeds of assignment executed by the local
copyright owners in its favor, together with their reciprocal representation agreementswith foreign
societies abroad. FILSCAP averred that Off the Grill played some songs that were assigned to it and
included in the Fiche Internationale's database.
In the Affidavit of Debra Ann Gaite, then the General Manager of FILSCAP, she asserted that the deeds
of assignment executed by the composers and publishers over the performing rights of their works to
FILSCAP were duly registered with the National Library of the Philippines and are easily available to
the public.
222
Gorospe stated that there is public performance when "a musical work is played to the public through
any means or process,"such as when the copyrighted musical work is "played or performed live through
a performer or mechanically through any audio or audiovisual player or device such as a CD player,
VCD player, DVD player, cassette player, television set or radio player. Gorospe averred that without
an authorization or "license," the public performance of the copyrighted work is illegal. During his cross-
examination, Gorospe asserted that if an establishment allows the singing or playing of copyrighted
songs in its venue, then it also allows the "public performance" of the songs.
FILSCAP found that copyrighted musical works under FILSCAP's repertoire were being performed
for the entertainment of the customers such as Ignition, If I Ain't Got You, Falling In Love With You,
Tattooed On My Mind, If I Was The One.
Michelle Flor (Flor), a Copyright Examiner from the National Library, mentioned in her Judicial
Affidavitthat FILSCAP regularly files and deposits with the National Library's Copyright Office the
deeds of assignment of performing rights over copyrighted musical works as well as reciprocal
representation agreements with other societies abroad.
RTC found COSAC guilty of infringement ruling that that the foreign composers of the 25 musical
works performed live or mechanically played in [COSAC's Off the Grill Bar and Restaurant], through
their foreign societies, had authorized [FILSCAP] also as assignee of their musical works to file this case
for infringement of copyright and damages against [COSAC] which allowed such live performance or
mechanical playing of the musical works in its x x x establishment for the benefit of its customers
without the requisite performance license from FILSCAP or without the payment of the license
fees/royalties to FILSCAP.
Moreover, the RTC held that under Section 182 of the Intellectual Property Code (IPC), the filing of
the deeds of assignment and the reciprocal representation agreements with the National Library and its
non-publication in the Intellectual Property Office (IPO) Gazette did not render the said deeds and
agreements void. Additionally, it ruled that FILSCAP, as duly authorized by the copyright owners, is a
real party-in-interest and has the standing to file the complaint based on Section 183 of the IPC.
The CA found that the copyright owners assigned their rights and remedies to FILSCAP through deeds
of assignment and reciprocal representation agreements. As such, FILSCAP is authorized to regulate the
223
public performance, mechanical reproduction, and synchronization rights granted by law to the creators
and owners of original musical works.
ISSUE: Whether COSAC committed copyright infringement. (YES.)
RULING: COSAC committed copyright infringement. Since the economic rights provided by the IPC
are exclusive in nature, not just anyone can exercise such rights. In other words, the use of any
copyrighted material without the consent of the copyright owner (or his/her assignee), and which
violates these economic rights, shall amount to copyright infringement.
Infringement of a copyright is a trespass on a private domain owned and occupied by
the owner [or assignee] of the copyright, and, therefore, protected by law, and infringement of
copyright, or piracy, which is a synonymous term in this connection, consists in the doing by
any person, without the consent of the owner [or assignee] of the copyright, of anything the sole
right to do which is conferred by statute on the owner [or assignee] of the copyright.
The gravamen of copyright infringement, according to NBI-Microsoft Corporation v. Hwang, is not

merely the unauthorized 'manufacturing' of intellectual works but rather the unauthorized performance
of any of the acts covered by Section 5. Hence, any person who performs any of the acts under Section
5 without obtaining the copyright owner's prior consent renders himself civilly and criminally liable for
copyright infringement.
To successfully claim that copyright infringement was committed, the evidence must show the "(1)
ownership of a validly copyrighted material by the complainant; and (2) infringement of the copyright
by the respondent." For the first element, original and derivative works are protected by copyright from
the moment of creation. The copyright owners can then enforce their rights, especially economic rights,
without the need for prior reporting or recording. In the same way, the copyright owners can assign
their rights to an assignee, and this assignment need not be registered for it to be valid. Thereafter, the
copyright owners or their assignee can properly pursue the protection and enforcement of these rights.
The second element is comprised of two (2) components: (1) the act of infringement; and (2) the
defendant or respondent who committed the act of infringement.
All the elements of copyright infringement, (1) ownership of a validly copyrighted material by the
complainant and (2) infringement of the copyright by the respondent, are present in this case. The songs
224
that were played in Off the Grill are copyrighted works, and the copyright owners have a right to enforce
their exclusive economic rights. COSAC, through the testimony of Tanan, admitted that it allowed the
playing of the copyrighted songs in the restaurant. Such performances were not covered by the
limitations on copyright or the fair use doctrine. More importantly, these were carried out to realize
profits for the establishment. Ergo, COSAC committed copyright infringement.
In any case, the playing of music in Off the Grill was not done privately, and the establishment is not a
charitable or religious institution or society. The playing of the creative copyrighted music in Off the
Grill was commercial in nature, and will work against the copyright owners' interests. Thus, COSAC's
acts did not fall under the said limitations and the fair use doctrine.
To be more precise, COSAC is a primary infringer, and also a secondary infringer under the concept of
vicarious infringement. This is because as owner of Off the Grill, it allowed the commission of infringing
acts when it permitted musical artists or bands to perform copyrighted music (secondary infringer), and
played sound recordings as background music (primary infringer) without first procuring a license from
the copyright owners (or assignees) of the songs and paying the fee. By doing so, COSAC unduly
enriched itself when it allowed the playing in public of copyrighted songs which in turn paved the way
for it to generate more profit without any additional expense to it. This contravenes the aim of copyright
laws to protect and compensate authors and the artists, as well as encourage them to produce more
creations for the eventual benefit of the public. FILSCAP's allegation that COSAC is a principal by
indispensable cooperation, in a way, finds basis in this rationale.
It should be mentioned that "at most, an assignee can only acquire rights duplicating those which his
assignor is entitled by law to exercise." Necessarily, FILSCAP's scope of authority is limited by what the
deeds or agreements specifically provide. Relevantly, too, FILSCAP alleged that it represents
"composers, lyricists/authors, and music publishers." As additional information, since FILSCAP is
currently recognized and accredited by the IPO as a Collective Management Organization (CMO), it
essentially has the personality to step in to protect the rights of copyright owners, specifically composers,
lyricists, music publishers, and other music copyright owners, as long as the copyrighted songs are under
FILSCAP's catalogue.
225
Therefore, FILSCAP, as the assignee, "is entitled to all the rights and remedies which the assignor had
with respect to the copyright."If FILSCAP determines that there is an infringement of the copyrighted
musical works, it can pursue appropriate measures to protect its rights and that of the assignors.
31. ICEBERGS FOOD CONCEPTS, INC. VS. FILIPINO SOCIETY OF COMPOSERS,

AUTHORS, AND PUBLISHERS, INC.
G.R. No. 256091, April 12, 2023
Ponente: SINGH, J.
Student Assigned: JAVIER
DOCTRINE: The courts' rulings affirmed that playing copyrighted music in public spaces, such as
restaurants, constitutes public performance, which requires authorization from the copyright owner. This
doctrine emphasizes the importance of obtaining proper licenses and permissions for publicly performing
copyrighted works to avoid infringement.
FACTS:
● Icebergs Food Concepts, Inc. and Allan John T. Young (petitioners) were found guilty of
copyright infringement for playing copyrighted music in their restaurants without a license.
● The Filipino Society of Composers, Authors, and Publishers, Inc. (FILSCAP) is the respondent
in the case.
● Icebergs is a corporation that operates several branches of restaurants in the Philippines, while
Young is the President and General Supervisor of Icebergs.
● FILSCAP is a non-profit association of composers and a government-accredited Collective
Management Organization (CMO) authorized to license and enforce public performance rights
over copyrighted musical works.
● FILSCAP discovered that Icebergs played copyrighted musical works from FILSCAP's
repertoire without the required public performance license.
● FILSCAP sent multiple letters to Icebergs requesting them to secure a license and pay the
corresponding fees, but Icebergs failed to respond.
● As a result, FILSCAP filed a complaint for copyright infringement against Icebergs.
226
● The Regional Trial Court (RTC) found Icebergs guilty of copyright infringement and ordered
them to pay damages and attorney's fees to FILSCAP.
● The RTC ruled that FILSCAP had the authority to license and collect license fees for the public
performance of musical compositions through the Deeds of Assignment executed by its
members and reciprocal agreements with foreign societies.
● The court also held that playing radio broadcasts as background music in Icebergs' restaurants
constituted public performance and copyright infringement.
● Icebergs appealed the RTC decision to the Court of Appeals (CA), but the CA upheld the
RTC's ruling.
● The CA ruled that playing radio broadcasts through loudspeakers amounted to public
performance and copyright infringement.
● The CA also rejected Icebergs' argument that the application of foreign laws and jurisprudence
was warranted because there was no domestic jurisprudence on the matter.
● Icebergs filed a Petition for Review on Certiorari before the Supreme Court, arguing that they
did not engage in public performance under the IP Code and that the application of foreign
laws and jurisprudence was necessary.
● However, the Supreme Court denied the petition, affirming the lower courts' rulings.
ISSUE: Whether Icebergs committed copyright infringement by playing copyrighted music in its
restaurants without a license. (YES.)
RULING:
● The Supreme Court held that Icebergs committed copyright infringement by playing
copyrighted music without a license.
● The court relied on the definition of public performance in the IP Code, which includes making
recorded sounds audible in a place where persons outside the normal circle of a family and their
closest social acquaintances are present.
● The court also cited previous cases establishing playing radio broadcasts through loudspeakers
as a public performance.
● The court rejected Icebergs' argument that they were not engaged in public performance
because they only switched on a radio transmitter.
● The court emphasized that playing radio broadcasts through loudspeakers constituted public
performance, regardless of whether Icebergs controlled the songs played on the radio.
● The court also discussed the concept of fair use but concluded that Icebergs' use of copyrighted
music did not constitute fair use.
227
● The court noted that fair use is a privilege to use copyrighted material in a reasonable manner
without the consent of the copyright owner, but Icebergs' use of the music as background music
in their restaurants did not fall under the fair use exceptions.
● In terms of remedies, the court affirmed the RTC's decision to award damages and attorney's
fees to FILSCAP.
● The court held that FILSCAP was entitled to compensation for infringing their copyright, and
Icebergs was ordered to pay actual damages, moral and exemplary damages, attorney's fees, and
monitoring expenses.
● The court also acknowledged the need for a small business exemption in copyright laws to
protect small establishments that play music through radios.
● The court suggested that Congress consider implementing a similar exemption to the United
States' small business exemption rule, allowing small businesses to play music without incurring
liability for copyright infringement.
● The Supreme Court upheld the lower courts' rulings and found Icebergs guilty of copyright
infringement for playing copyrighted music without a license.
Ratio:
● The court based its ruling on the provisions of the Intellectual Property Code of the Philippines,
which grants copyright owners the exclusive right to authorize the public communication of
their works.
● Iceberg's act of playing copyrighted music in its restaurants constituted a communication with
the public, requiring a FILSCAP license.
● The court also discussed the need for a small business exemption in the copyright law, similar to
the one in the United States, to protect small businesses from liability for copyright
infringement under certain conditions.
● The court suggested that Congress consider implementing such an exemption to achieve a more
equitable copyright system that balances copyright holders' rights and small businesses' needs.
● In terms of remedies for infringement, the court upheld the RTC's decision to award FILSCAP
actual damages, exemplary damages, and attorney's fees.
● The court also clarified that a juridical person, such as FILSCAP, is generally not entitled to
moral damages.
● The monetary award will earn interest at a rate of six percent per annum from the finality of the
judgment until its full satisfaction.
● The court emphasized the need to strike a balance between the rights of copyright holders and
the rights of small businesses to use copyrighted works.
228
32. PHILIPPINE HOME CABLE HOLDINGS, INC. VS. FILIPINO SOCIETY OF
COMPOSERS, AUTHORS & PUBLISHERS, INC.
G.R. No. 188933

Ponente: LEONEN, J.
DOCTRINE: The requisites of copyright infringement claim, twere proved: first, the complainant or
plaintiff's ownership of a validly copyrighted material, and second, the defendant or respondent's exercise
of any the enumerated economic rights without the consent of the copyright owner or holder.
FACTS: Philippine Home Cable Holdings, Inc. (Home Cable) is a domestic corporation engaged
primarily in the business of installing, operating, and maintaining a community antennae television
system, commonly known as "cable television." As part of its business as a cable television system
operator, it enters into channel distribution agreements with international broadcasters or originators.
The international broadcasters or originators' channels are thus shown to Home Cable's fee-paying
subscribers.
Home Cable—then operating as Singing Makulay, Inc.—executed a Memorandum of Agreement with

Precision Audio Video Service, Inc. (Precision Audio), a domestic corporation that produced and
distributed videoke laser disc recordings.7 Based on the agreement, Home Cable purchased 24 volumes
of laser discs containing videoke materials from Precision Audio nder the terms of this agreement, Home
Cable was responsible for and in control of operating channel 38, including providing the equipment
such as laser disc and VHS players.10 In turn, Precision Audio guaranteed that it had full copyright over
all the laser discs and that it had already acquired all necessary permits from relevant government agencies
for the laser discs
A year later, Home Cable again executed a Memorandum of Agreement with Precision Audio, this time
for the operation of channels 22, 32, and 52. This agreement also provided for Home Cable's
229
responsibility and control over the three channels, content for which were to be provided by Precision
Audio's videoke laser discs.
In July 1997, Filscap monitored Home Cable and found that its members' and foreign affiliates' musical
compositions were being played on channels 22 and 32.17 It sent letters to Home Cable advising that
Home Cable obtain a license from Filscap and pay the license fees for the continued use of its musical
compositions on Home Cable's channels,18 but Home Cable did not respond. Then, on January 12
and 13, 1998, Filscap monitored channels 22 and 32 and again found that Home Cable continued to
play its members' musical compositions despite not securing a license from Filscap
Following a trial, the Regional Trial Court issued its Decision26 finding Home Cable liable for
copyright infringement.
Upon appeal, the Court of Appeals modified the Regional Trial Court's Decision. While it affirmed the
trial court's finding of copyright infringement, it reduced the damages awarded to Filscap Home Cable's
Motion for Reconsideration was denied on July 21, 2009.
Home Cable filed petition for Certiorari.
ISSUE: Whether HOME CABLE committed copyright infringement. (YES.)
RULING: HOME CABLE’s unauthorized exercise of the copyright holders' communication to the
public rights as a result of cablecasting the two karaoke channels is copyright infringement.
To uphold a copyright infringement claim, the following must be proved: first, the complainant or
plaintiff's ownership of a validly copyrighted material, and second, the defendant or respondent's
exercise of any the enumerated economic rights without the consent of the copyright owner or holder.
For the second element, it must further be shown that the exercise of the economic right was
inconsistent with any of the limitations on copyright and permissible unauthorized reproductions and
importations. Alternatively, the defendant or respondent may prove that its exercise of the economic
right falls within fair use.
As to the first element, petitioner challenges respondent's right to sue it for alleged unauthorized
"public performance" or "communication to the public" of works which "performing rights" were
assigned to respondent. Petitioner's contention that what the composers and music publishers assigned
to respondent were "neighboring rights" in is erroneous. Considering the type of works involved, their
230
authors, and the phrasing of the deeds of assignment, it is evident that economic rights were assigned to
respondent.
Performers are defined in Subsection 202.1 as "actors, singers, musicians, dancers, and
other persons who act sing declaim, play in, interpret, or otherwise perform literary and
artistic work." For purposes of Chapter XII on the rights of performers, producers of sound
recordings and broadcasting organizations, these performers have rights over their
performances separate from the right to perform or publicly communicate the literary or
artistic work, which is vested in the author of the work.
Respondent does not represent performers of the subject musical compositions. Consistent with its
mandate, it is a collective management organization for composers, authors, and publishers in the field
of musical compositions. This is clear based on the definition of "copyright work" in the deed of
assignment it enters into with its affiliates or members. Respondent claims that the lack of explicit
reference to the right to communicate the work to the public is because, at the time when the deeds were
written, the prevailing copyright law was Presidential Decree No. 49, which enumeration of economic
rights predated many technological developments that may have an effect on literary, artistic, and
scientific works.
The wording of the deeds of assignments indicates that among the rights assigned to respondent by the
copyright holders was the right to broadcast or cause a work to be transmitted to subscribers to a
diffusion service. Even without the use of the specific phrase "communication to the public,"
respondent is plainly the assignee who may authorize others who wish to do these acts with respect to
the copyright holders' musical compositions, or demand compensation in case these acts were done
without their consent or authority.
The second element of copyright infringement is similarly present in this case. Playing a musical
composition, fixed in an audiovisual derivative work, over cable television to paying subscribers is
making that work accessible to members of the public from a place or time individually chosen by them.
This is the essence of the "communication to the public" right.
To evade liability, petitioner argues that its transmission of the subject musical compositions is not an
infringing act.
Consistent with Section 181 of the Intellectual Property Code, petitioner's purchase of the laser discs
from Precision Audio as part of their agreements did not by itself transfer or assign the copyright of the
fixed musical compositions in those laser discs. Assuming that Precision Audio's production and
distribution of the videoke laser discs was with the copyright holders' consent, only the economic rights
231
to adapt the musical compositions to videoke format, reproduce the fixation in laser disc, and sell the
laser discs were granted to Precision Audio, unless the terms of the license state that additional rights
were included.
To emphasize, copyright over an original work is unaffected even when that work is used in a derivative
work. And the grant of copyright protection to the derivative work does not by itself make the use of
the original work, or any part of it, lawful absent the copyright holder's consent. Precision Audio may
warrant that it holds the copyrights to the videoke works fixed in the laser discs purchased by petitioner,
and it may license or assign any of the videoke's economic rights to petitioner as part of the sale, but that
does not affect the copyright over the underlying musical composition which is a component of the
videoke. At most, Precision Audio validly granted to petitioner the right to publicly perform or
communicate to the public the videoke, but not the composite original works which economic rights
were held by others, such as the composers, authors, or publishers that respondent represents.
Petitioner's liability for copyright infringement is separate and distinct from Precision
Audio's.Therefore, its unauthorized exercise of the copyright holders' communication to the public
rights as a result of cablecasting the two karaoke channels is copyright infringement.
33. FERNANDO U. JUAN V. ROBERTO U. JUAN (SUBSTITUTED BY HIS SON JEFFREY

C. JUAN) AND LAUNDROMATIC CORPORATION
G.R. No.221732. August 23, 2017.
Topic under the Syllabus: Copyright vs. Trade or Service Name
DOCTRINE: Copyright is the right of literary property as recognized and sanctioned by positive law.
An intangible, incorporeal right granted by statute to the author or originator of certain literary or
artistic productions, whereby he is invested, for a limited period, with the sole and exclusive privilege of
multiplying copies of the same and publishing and selling them.
Trade name, on the other hand, is any designation which (a) is adopted and used by person to
denominate goods which he markets, or services which he renders, or business which he conducts, or
232
has come to be so used by other, and (b) through its association with such goods, services or business,
has acquired a special significance as the name thereof, and (c) the use of which for the purpose stated
in (a) is prohibited neither by legislative enactment nor by otherwise defined public policy.
FACTS: Respondent Roberto Juan claimed that he began using the name and mark "Lavandera Ko" in
his laundry business on July 4, 1994. He then opened his laundry store at Makati City in 1995.
Thereafter, on March 17, 1997, the National Library issued to him a certificate of copyright over said
name and mark. Over the years, the laundry business expanded with numerous franchise outlets in
Metro Manila and other provinces. Respondent Roberto then formed a corporation to handle the said
business, hence, Laundromatic Corporation (Laundromatic) was incorporated in 1997, while
"Lavandera Ko" was registered as a business name on November 13, 1998 with the Department of Trade
and Industry (DTI).
Thereafter, respondent Roberto discovered that his brother, petitioner Fernando was able to register the
name and mark "Lavandera Ko" with the Intellectual Property Office (IPO) on October 18, 2001, the
registration of which was filed on June 5, 1995. Respondent Roberto also alleged that a certain Juliano
Nacino (Juliano) had been writing the franchisees of the former threatening them with criminal and
civil cases if they did not stop using the mark and name "Lavandera Ko." It was found out by respondent
Roberto that petitioner Fernando had been selling his own franchises. Thus, respondent Roberto filed
a petition for injunction, unfair competition, infringement of copyright, cancellation of trademark and
Preliminary Injunction with the RTC.
RTC dismissed the petition and ruling that neither of the parties had a right to the exclusive use or
appropriation of the mark "Lavandera Ko" because the same was the original mark and work of a certain
Santiago S. Suarez in his musical composition called, "Lavandera Ko", both parties failed to prove that
they were the originators of the same mark.
ISSUE: Whether a mark is the same as a copyright. (NO.)
RULING: The Ruling of RTC is erroneous.
Lavandera Ko," the mark in question in this case is being used as a trade name or specifically, a service
name since the business in which it pertains involves the rendering of laundry services. Under Section
121.1 of R.A. No. 8293, "mark" is defined as any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a stamped or marked container
of goods. As such, the basic contention of the parties is, who has the better right to use "Lavandera Ko"
as a service name because Section 165.2[13] of the said law, guarantees the protection of trade names
233
and business names even prior to or without registration, against any unlawful act committed by third
parties. A cause of action arises when the subsequent use of any third party of such trade name or
business name would likely mislead the public as such act is considered unlawful. As such, "Lavandera
Ko," being a musical composition with words is protected under the copyright law (Part IV, R.A. No.
8293) and not under the trademarks, service marks and trade names law.
Hence, the RTC erred in denying the parties the proper determination as to who has the ultimate right
to use the said trade name by ruling that neither of them has the right or a cause of action since
"Lavandera Ko" is protected by a copyright, this case shall remand to RTC for prompt disposition.
234

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COMMERCIAL LAW REVIEW II

Dean Sergio M. Ceniza

CASES ON BANKING LAWS

General Banking Act of 2000/ New Central Bank Act PAGE

Bank Secrecy Law/Foreign Currency Deposits Act

CASES ON INTELLECTUAL PROPERTY LAW

Trademark Infringement and Unfair Competition

Copyright vs. Trade or Service Name

Student Assigned: ALARIAO

2. ALLIED BANKING CORPORATION vs. SPOUSES MARIO ANTONIO MACAM &

Student Assigned: ALCAZAREN

3. LANDBANK OF THE PHILIPPINES VS. GUALBERTO CATADMAN

Student Assigned: ALUMNO

Catadman did as he promised. However, after paying an accumulated amount of ₱15,000.00, he

Student Assigned: PUNZALAN

ISSUE: Whether Go is liable for violating Sec. 83 of RA 337. (YES.)

5. SORIANO VS. PEOPLE

Student Assigned: BALICOCO

The Court does not agree.

6. APOLINARIO, JR. Y LLAUDER VS. PEOPLE

FACTS: In two separate Informations, Apolinario, Winefredo T. Capilitan (Capilitan), Motohiko

ISSUE: Whether there was a violation of the DOSRI Law. (YES.)

The conviction of the petitioner is affirmed.

7. THE CENTRAL BANK OF THE PHILIPPINES VS. CA AND TRIUMPH SAVINGS

Student Assigned: BAUZON

Topic under the Syllabus: The New Central Bank Act

8. BF SAVINGS BANK VS. MB

Student Assigned: BERNARDO

Topic under the Syllabus: New Central Bank Act

9. CENTRAL BANK OF THE PHILS. V. CA

Ponente: DAVIDE, JR., J.

Student Assigned: BILGERIA

Topic under the Syllabus: New Central Bank Act

10. RURAL BANK OF SAN MIGUEL, INC. V. MONETARY BOARD

Student Assigned: CAAGBAY

11. BANGKO SENTRAL NG PILIPINAS V. OFFICE OF THE OMBUDSMAN

Student Assigned: CARIAS

Topic under the Syllabus: New Central Bank Act

Thus, there was a violation of Section 27 (d) of Ra 7653.

12. CITYSTATE SAVINGS BANK V. TERESITA TOBIAS, ET. AL.,

Ponente: REYES, JR., J.

Student Assigned: COBARTE

RTC: Judgment is hereby rendered ordering defendant Robles to pay plaintiff.

CA: Reversed and set aside the RTC's decision.

13. GOLDWELL PROPERTIES TAGAYTAY, INC. V. METROBANK

Student Assigned: COQUIA

Loan Restructuring and Debt Settlement Agreements

Payment Disputes and Default

15. BANCO FILIPINO SAVINGS AND MORTGAGE BANK VS. BSP

Student Assigned: DULLAS

Topic under the Syllabus: New Central Bank Act

Further, the Court said:

16. HERMOSA SAVINGS AND LOAN BANK, INC. V. DBP

Student Assigned: GONZALES, Anne Gelique

CASE NO. 17: SORIANO V. PEOPLE

Student Assigned: GONZALES, Alexandria

Topic under the Syllabus: General Banking Act of 2000

RULING: Petitioner violated Section 83 of R.A. No. 337, as amended.

Violation of the DOSRI Law: